Tenants in Common vs Joint Tenants
Should you own your property as joint tenants or tenants in common?
Pride of ownership and security are some of the best aspects of owning a home. Yet when two or more people decide to purchase a home together, they must decide on how to take title to the property. There are two options: tenants in common and joint tenants and each has its pros and cons.
Tenants in Common
Owning a property as tenants in common means you jointly own the property but as co-owners you are regarded in law as having separate shares. Often shares are held on a 50/50 basis, but if one person is putting more of their money in than the other, the shares can be more specific. The amount that’s owned will be stipulated and agreed at the start of the process. The parties need not hold the property in equal shares.
In the event of the death of a tenant in common, the survivor or surviving owners must pay to the estate of the deceased party half the net proceeds of sale or whatever share the deceased party had in a property.
A tenancy in common may be chosen, for example, when a couple are purchasing together but have children from a previous relationship. A tenancy in common is essential to ensure your children inherit your interest in the property. It is also imperative for you to make a Will to state who you wish your share in the property to be inherited by. If you do not and you are married or in a civil partnership with the other tenant in common then they will inherit all or most of your share of the property instead of your children.
This option is also advisable for couples who decide not to marry and who may be contributing different amounts of money to the transaction. This will protect their individual interest in the property and the sums invested in the property.
Owning your property as beneficial joint tenants means the property belongs to you and the other owner or owners jointly. There is no separate distinction between tenants.
You will not own any specific shares in the property and you cannot give away a share of the property in your Will. In the event of the death of one of the joint tenants, their interest in the property automatically passes to the surviving owner or owners.
Often this is the form of ownership chosen by married couples or civil partners, where these parties are content for the survivor to be the absolute owner. The ownership of the property held on a joint tenancy basis cannot be altered by a Will. A Will made by a joint tenant which tries to leave the property to anyone other than another legal joint tenant would be ineffective.
Changing from joint tenants to tenants in common
This is called severing the joint tenancy (also known as Deed of Severance). This can be a useful option when your circumstances have changed, for example, you are separating from your partner but have not yet formally divorced. It can also be a useful option in asset protection planning (see here for more information).
By severing a tenancy you are not changing who owns the property. You are only changing the manner in which you own the property. In order to carry out a severance, you need to complete and sign a Deed of Severance that confirms that you intend to own the property not as joint tenants but as tenants in common.
Any owner of a property held as joint tenants can effect this change, they do not need the consent of the other parties (although they would need to serve the other owners notice that they are taking this action).
Wheelers Solicitors can advise you on your situation and sever joint tenancies where necessary.