If you are considering purchasing a property with another person, it is important to be aware of the different ways in which it can be owned.
There are two types of joint ownership available to you under English law. When buying a property in joint names, you will need to decide which type of joint ownership will best suit your needs.
The two options are co-owners as joint tenants or co-owners as tenants in common.
Co-Owners as Joint Tenants
If you own a property with one or more other people as joint tenants, all the tenants own the property in its entirety. For example, if a husband and wife own a property as joint tenants, they are both wholly entitled to the entire property simultaneously and cannot be said to be holding specified shares of the property. If one of them dies, the surviving joint tenant automatically becomes solely entitled to the property, irrespective of what is provided for in the deceased’s will. This has various implications as the property passes directly to the survivor(s) and does not form part of the deceased’s estate until the last surviving owner dies, when the whole of the value of the property will be included in the valuation of that person’s estate.
If the property is sold, all the joint tenants will share the net sale proceeds equally.
Co-Owners as Tenants in Common
A tenancy in common differs from a joint tenancy in that tenants are not considered to own the property in its entirety but are said to own a notional share of it. If tenants own a property in equal shares, then as tenants in common they would each be said to own one half of the property, rather than both owning the whole property. Tenants in common can own shares in a property in any agreed proportion. However, in spite of the fact that the tenants are each deemed to own a share of the property, this does not mean that the land can be physically divided between them. A tenant under a tenancy in common is entitled to access to the whole of the property, however small their interest.
The rule of survivorship does not apply to this kind of tenancy so co-owners as tenants in common are free to leave their share in the property to whomever they choose. If you decide to hold a property as tenants in common with someone, the provisions of your will determine who will inherit your share. If you die leaving no will, your share will pass under the laws of intestacy: your co-owner(s) will not necessarily inherit your share.
On sale, the net sale proceeds will be shared among the owners in proportion to their ownership shares.
A decision regarding the way a joint property is owned need not be permanent. If circumstances change, it is possible to change from one form of ownership to the other.
If you are a joint owner of a property then you will normally be registered as such on the deed of title at the Land Registry.
Which type of ownership is best for you will depend on your individual circumstances.
We will be pleased to give you individual advice. In addition, it is always sensible for property owners to have a will, as it will simplify the administration of the estate.
Contact Adam Oleskow, Danny McCorry, Angela Hyde or Kay Stenson for help or advice on property ownership matters or complete our online enquiry form.
For Wills Trust or Probate Matters, contact our Private Client team.
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