Buying A Property Together Joint Tenants Or Tenants In Common

Date Added 05.10.16

Principally there are two ways in which joint property owners can own or “hold” property. The first is as Joint Tenants and the second is Tenants in Common.

Joint tenant

(sometimes called ‘beneficial joint tenants’) is where each owner has equal rights to the whole propertythe property automatically goes to the survivor on first death and it cannot be left in a will.

Tenants in common 

is where different shares of the property can be ownedthe property doesn’t automatically go to the other owners on death and the share of the property can be left in a will.

Holding as Tenants in common can help minimise inheritance and capital gains tax and also prevent the property from having to be sold to go into long-term care.

Most married couples or Civil Partners tend to own as joint tenants. This is because the law presumes they will own the property that way. However if either or both have children from a previous relationship, they can hold the property as tenants in common and make provision in a Will that on the death of the first owner, the survivor can live in the property until they die, remarry or vacate the property and at that time, the property would be sold and the share in the proceeds of sale pass to the respective children.

When unmarried couples buy property they should take care to record if one of them is supplying more of the funds for the purchase than the other. If this is the case and they buy as joint tenants, and the relationship breaks down which results in a sale or transfer of the property, it will be deemed that they hold the property equally and the shares in which the funds were brought in to buy the property will be ignored.  The best way is to hold the property as tenants in common in the proportions that they fund the purchase; this can be anything from 51%-49% to 99% -1%.

In this case a Declaration of Trust should be entered into by the purchasers which records the proportions of funds supplied, including any mortgage advance, and confirms that this will be the way they would be distributed on a sale.   It can be included in this document that from the date of the purchase any increase in value of the property would be shared equally.

If purchasers do not give due consideration to this subject before completing the purchase, this can lead to problems and has resulted in the parties going to Court.  This can be avoided and we at Tollers can give expert advice on Declaration of Trusts and Wills.

If the property has been purchased as Joint Tenants and one party is not happy to keep matters this way, a party can serve notice on the other, usually by a simple letter that they wish to “sever” the joint tenancy. Following that the property will be held as Tenants in Common in equal shares.  It is also possible to change from Tenants in Common to Joint Tenants.

If you have any concerns or queries regarding buying a property, Talk to Tollers. Our legal experts will be able to give advice based upon your particular circumstances, call 01536 276712 to arrange an appointment.

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