Property Co-Ownership: Joint Tenants Or Tenants In Common?
As co-owners, how should we own our new property?
The most appropriate way to own property as co-owners will depend upon your relationship with the other co-owner(s), the proportion of your contribution and whether you wish to protect this contribution.
Please note: in this context, the term ‘tenant’ has a different legal meaning to the tenants that rent a property from a landlord.
Property Co-Ownership: Joint Tenants
As joint tenants, co-owners will have equal rights to the entire property. As you will not own a quantified share you will not be able to leave a share of the property in your will. If the relationship breaks down, or the property is sold, it will be presumed that you both own the property equally regardless of any different contributions to the purchase price. The right of survivorship means that upon the death of a co-owner, the whole property passes to the surviving co-owner. When the surviving co-owner passes away the entire property would form part of their estate. This makes joint tenants a practical option for married couples or those in a civil partnership as it is straightforward to inherit each other’s interest in the property.
There are several situations where the joint tenancy may be automatically severed, such as if one party becomes bankrupt. It is important to note that either co-owner may sever the joint tenancy without the other’s agreement at any point.
There may be reasons joint tenants would not be a suitable option. If a co-owner has children from a previous relationship, they may not wish to own the property as joint tenants as they cannot leave a share of the property in their will. If the co-owners have contributed different proportions to the purchase price, joint tenants may also not be the best choice. These considerations will be discussed with your instructed solicitor at the appropriate point in your property transaction.
Property Co-Ownership: Tenants In Common
Tenants in common own shares in the property in distinct proportions, these may be equal or different depending on the party’s wishes. If you wish to hold the property as tenants in common, you should sign a declaration of trust to formally set out your respective shares in the property. Since tenants in common own specific shares in the property, they cannot automatically pass to the surviving co-owner upon death as with the right of survivorship. Instead, their interest is ring-fenced and will pass in accordance with their will upon death. If you wish to own your property as tenants in common it is important you have an up-to-date will to deal with your share. If you do not have a will, your share will be dealt with according to the rules of intestacy.
Different contributions to purchase price:
If a co-owner contributed significantly to the purchase price, they may wish to own the property in specific, unequal shares to reflect their contribution and ensure they receive their proportion upon selling the property.
Children from previous relationship:
By owning specific shares in the property, co-owners can pass their interest on to another person either during their lifetime or in accordance with their will. This is practical for co-owners with children from previous relationships who they would like their share to go to either later in life, or upon their death.
Other reasons to co-own as tenants in common:
Tenants in common is a suitable way for co-owners to hold a property for a variety of reasons. It is important to seek legal advice to ensure you make an informed decision based upon your personal circumstances. When purchasing a property with Nantes, your solicitor will raise this with you at the appropriate point and provide any further advice as required by your situation.
Get in touch
If you’d like to find out more information about Property Co-Ownership or you would like to begin the conveyancing process then please get in touch by calling 01305 771 000 or via our contact page. Alternatively, you can find out more information about property co-ownership by visiting https://www.gov.uk/joint-property-ownership
