Tenants in common agreement

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Document overview

This co-ownership is for a single purpose - to separate the ownership of property between two or more owners for legal purposes. Use it either to separate out your joint interest or to set down different ownership shares, or both. Examples of situations in which you might use it include: if you are divorced or considering separation, or if you have bought a property with friends. In law, it converts a joint tenancy to a tenancy-in-common. It does not provide a management framework. See below for alternative documents covering management and other arrangements.
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Who should use this agreement

This tenants in common agreement 'severs' a joint tenancy, and sets out how the sale proceeds of real property will be split between the co owners.

  • You may be married or in a relationship, and want to know that if you separate, when the property is sold you will each get out what you have put in.
  • You may be a couple, group of friends, brother and sister, or parent and child, buying a house together to get on the property ladder.
  • You may be buying a property as an investment with a business partner.

This tenants in common agreement protects the individual interest of each owner. It does not cover property management.

The law on co-ownership of property

In law, the relationship of co owners of property is either as 'beneficial joint tenants' or as 'tenants in common'. The term 'tenant' has no connection with a tenant under a lease. Under either sort of tenancy, a joint owner can insist on a sale.

Usually, your conveyancer will draw the document transferring your property to you in words that make you 'beneficial joint tenants'. That means:

  • You own the property equally.
  • When you sell, the proceeds will be divided equally, even if one of you has contributed more in the meantime.
  • If one of you dies, the other(s) automatically get the deceased's share - even if the co owners are divorced or separated, and regardless of what is written in any Will.

About this tenants in common agreement

This tenants in common agreement changes the relationship from joint tenants to tenants in common. There are two purposes to this.

First it 'severs the joint tenancy', so that each owner owns an identifiable share. This could be 50:50, or it could be any other ratio. The change in ownership interests is legally valid, but will not change other pre-existing obligations, for example, who is responsible for repaying the mortgage.

Secondly, it sets out the arrangements for division of the proceeds of sale of the property. Depending on the circumstances, that will be legally binding between the owners, but may not be binding against a third party, like a trustee in bankruptcy.

The agreement enables you to choose the ownership proportions or make arrangements for changing the proportions. For example, you may want a gradual increase in the share of one owner who is paying off a mortgage or parent-lender.

After you have signed this tenants in common agreement:

  • Your shares in the property are separate in law, so that a creditor of one cannot take the share of the other as well.
  • When you sell, the net proceeds are divided in the shares you have agreed.
  • If one of you should die, that person’s share will pass according to their Will or intestacy.

During the conveyancing process when buying a property, your conveyancing solicitor should ask you whether you want to hold it as joint tenants or tenants in common. However, historically many have not and many continue to fail to do so. To change the type of ownership without changing the records at the Land Registry is one advantage of using this document.

When you buy a property you can record on the title deeds each co owners share of the property. However, the deeds do not allow for changes over time to ownership shares. If your ownership percentage isn't just based on the purchase price, but on mortgage repayments and/or contributions to repairs and improvements you can use this document to set out a calculation for ownership rather than fixed percentages.

Changing to tenants in common to leave your property in your Will

A common reason that property owners change from joint tenants to tenants in common is to control what happens to their share of the property after they die.

Under a joint tenancy, co owners own the whole of the property together. It is not owned in discrete parts. As a consequence, on the death of one tenant, the property remains owned by the other.

This isn't usually a problem if you want to leave your share of the property to your co owner (such as your wife, husband or civil partner who receives it free of inheritance tax).

However, if you want to leave your ownership interest in the property to someone else in your Will, such as a more distant family member, you have to own a discrete share of the property as tenants in common to do so.

There are many reasons why an owner might want to leave their interest in the property to someone else: from minimising inheritance tax, to 'protecting' against an assessment on a spouse's estate for care home fees, to making sure that children from an earlier marriage or relationship inherit.

Similar documents

A tenancy in common agreement is often called a deed of trust or a declaration of trust. This document could be given these names, but a deed of trust tends also to specify the financial responsibilities that each co owner has. Our document does not, for the reason that financial responsibilities tend to be created by other documents such as a mortgage agreement, and while they can be stated they cannot be changed.

Nor does this document contain arrangements for managing your property because it may become a public document, registered at the Land Registry for all to see.

We cover management arrangements very thoroughly in other documents. Have a look at:

Joint ownership agreement: holiday property regulate the share ownership and use of a house, flat or other property for holiday occupation among different owners

Joint ownership agreement: residential property to record the joint ownership of a single residential property. Where all the owners occupy the property at the same time.

Cohabitation (living together) agreement sets out living arrangements, such as responsibility for bills.

Depending on your relationship, you may also want to consider usin our prenuptial agreement template or our separation agreement template to set out ownership of other assets.

Agreement features and contents

  • Suitable for situations where there are up to four owners (the maximum allowed by law)
  • Provides for a joint tenancy to be ended and changed to a tenancy in common
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