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Understanding joint tenants vs tenants in common

Buying a house with a friend, spouse or family member has been ordinary practice for years. More recently, however, multiple owners are becoming more common as parents, friends and other relatives stump up the cash to help their loves ones - particularly first-time buyers - get on to the property ladder.

There are two different types of co-owners when two or more people are buying together. They're known as joint tenants and tenants in common.

It's essential you decide up front which kind of agreement you want your solicitor to set up for you. But first you need to understand what they both mean and how they might affect your plans in the future. Read on to find out more about the difference between joint tenants and tenants in common, how they work and how Homeward Legal's conveyancing solicitors can help you.

What does joint tenants mean?

Joint tenants is the legal term for joint ownership between two or more people. Simply put, all joint tenants own the entirety of the property. So, if one dies, his or her interest disappears and the surviving joint owner(s) automatically own the property outright.

If the property is sold while each is still living, the general rule is that each is entitled to an equal share of the net sale proceeds. This is only a general rule and may be challenged - in divorce proceedings, for example.

Joint tenancy is typically most suited to:

  • Married couples
  • Civil partnerships
  • Long-term relationships

However, this is not always the most straightforward or financially advantageous method of co-ownership. For example, if one person is making a much larger contribution to the purchase, tenants in common may be a more suitable arrangement.

What does tenants in common mean?

The second option is known as tenants in common or ownership in common. All (two or more) tenants in common own a separate, distinct share, either for equal or unequal amounts, which they are free to leave to someone else in their will.

It's important to note that when you buy with someone else with a mortgage, each of you is liable for the full amount owed on the mortgage, regardless of what percentage of the property you have.

When the property is sold while all owners are living, the net sales proceeds are split according to each shared percentage. For example, if you were tenants in common with a friend and owned a 60% share of a mortgage-free property that sold for £200,000, you would receive £120,000 and your friend £80,000.

Becoming tenants in common can be practical for when:

  • Either co-owner has a child or children from a previous relationship.
  • The co-owners are an unmarried couple or are not in a civil partnership.
  • Unequal contributions are made by each co-owner to the mortgage, deposit, purchase price and maintenance.
  • One co-owner does not want their share to pass automatically to the surviving co-owner.
  • Business partners are buying together.
  • Co-owners want to reduce potential inheritance tax on an estate.

If you're already involved in a co-ownership agreement with a friend, relative or loved one but are not sure whether you are joint tenants or tenants in common, you can soon find out. You can do this by checking documents such as a property transfer, property lease or trust deed.

Deciding whether to become joint tenants or tenants in common is not always an easy decision. We've explained what they both mean, but it's only natural that you'd like to know more about the specifics of each co-ownership. With that in mind, here are a few frequently asked questions about both arrangements.

What happens when one of the joint tenants dies?

If one of the joint tenants passes away, full ownership of the property would pass to the surviving joint tenant(s). Under joint ownership, neither can transfer their share to another person via a will.

What happens when one of the tenants in common dies?

All tenants in common are free to leave their share of the property to whomever they choose. So, if one passes away, the outcome will depend on what they have stipulated in their will. Where that person dies without leaving a will (intestate), their share passes to their next of kin. To ensure their share goes exactly where they want it to, it's crucial that a tenant in common makes a will and keeps it up to date.

Can one joint tenant sell the property?

No, all joint tenants must agree to selling the property.

Can one tenant in common sell the property?

No, all tenants in common must agree to selling the property.

Can one tenant leave a joint tenancy?

Yes. If one tenant wishes to leave a joint tenancy, perhaps due to the break-up of a relationship, there are a few options available. Your ex-partner could buy your share of the property and for those not married or in a civil partnership, they could pay your share of the mortgage, known as occupation rent. Either way we recommend using a reputable conveyancing solicitor, in case a transfer of equity is the best solution for you.

Speak to a member of our expert team to find out how transfer of equity could work for you.

If you cannot agree on what happens to the property, you can enter mediation or even go through the courts in order to decide.

Can one person leave a tenants in common agreement?

Yes, but in order to do so they must have agreement from all the other tenants in common or have secured backing from the courts.

Can I change from tenants in common to joint tenants?

Yes, but you need all of the other tenants in common to agree. In order to change from tenants in common to joint tenants, you will need to:

  • Fill in a document called a trust deed. If you already have one, you will need to update it. A conveyancing solicitor can help you with this.
  • If the property has any restrictions, you will need to download an RX3 form to cancel those.
  • You'll then have to prepare any necessary paperwork and send it along with the RX3 form to HM Land Registry. There is no fee for this.

Can I change from joint tenants to tenants in common?

Yes. This is also known as severing joint tenancy to tenants in common and you can do this without needing the agreement of the other co-owners. You will need to:

  • Serve a written notice of severance to the other tenants in common, unless they have already agreed. A conveyancing solicitor can help you with this.
  • You'll then be required to fill in form SEV to register any restrictions.
  • Finally, you'll need to collect any paperwork and send everything to HM Land Registry, for which there is no charge.

Whether joint tenants or tenants in common, get the expert help you need

Becoming joint tenants or tenants in common can seem complicated, but hopefully now you have a clearer idea of the ins and outs of both and which method might be most suited to you.

Particularly when buying as tenants in common, you need to have a precise agreement drawn up that details each party's share. This is usually in the form of a Declaration of Trust or Cohabitation Agreement. The document can be updated whenever there is any change in the co-owners' circumstances.

Tenants in common should each make a will that outlines what they want to happen to their share in the event of their death. You should ask a solicitor to enter a restriction on the property's title at the Land Registry that prevents the registration of a sale or mortgage unless a solicitor or conveyancer certifies the application was made by you.

Changing a co-ownership agreement or becoming joint tenants or tenants in common for the first time is likely to require specialist legal advice. Talk to Homeward Legal's expert team today on for the best help and guidance on finding the right solicitor to lead you through the process.

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