News & Insights

Joint Tenants or Tenants in Common – What does this mean and why does it matter?

Choosing to own a property with someone else is an important decision. Once you have made this decision, you’ll need to decide how you would like to hold the property. This may seem daunting at first, but what you choose can have a significant impact, and so this is something should consider carefully.

You can hold a property in one of two ways:

  • Joint tenants
  • Tenants in common

Joint Tenants

In a joint tenancy, the co-owners will own the whole of the property together, and no one is treated as having a particular share in it.

If one of you dies, as there are no defined shares, the remaining co-owner(s) continue to hold the whole of the property, and the deceased cannot pass their interest to anyone else. This is something that happens automatically, independent of any decisions set out in a Will. This is known as the right of survivorship.

If you sell the property, there is a presumption that you own the property equally, regardless of contributions to the purchase price to begin with. It is difficult to argue otherwise.

Tenants in Common

If you hold the property as tenants in common, this means that you each own a specific share in the property. It is your decision how you wish to split the shares, whether this is 50/50 or 80/20. This can be useful if you would like your separate contributions reflected in the ownership, and also the division of the sale proceeds if you sell.

Your share is your own, and this can be passed to another person during your lifetime or under your Will. It is important to note that if you die without a Will in place, your share of the property will pass in accordance with the rules of intestacy.

Some people therefore choose this form of ownership for inheritance tax planning in accordance with the preparation of their Will. If you are considering making a Will, we recommend advice is taken prior to signing the transfer deed (the document which passes legal ownership of the property on completion). Our Wills, Trusts and Estates team can assist with this. 

What should you choose?

When you buy or transfer property, you will need to confirm how you wish to hold the property to avoid any uncertainty. Making this decision at the outset prevents the need for a court to intervene to make the decision for you in the event of a dispute; they may also decide to divide the property in a way which was not your intention.

Joint tenancy is commonly chosen between married couples, where they do not wish to define specific shares, and their intention is that upon death, the property automatically transfers to the other.

Tenants in common is often used for property owned between siblings, parents and children, unmarried couples or business partners. This may be the case if they prefer to own specific shares, and would like the freedom to leave their share to another in their Will.

Which form you choose is your own decision and depends on your personal circumstances.

If you are considering holding a property as tenants in common, you may wish to formalise your shares and terms in a legal document called a Declaration of Trust. This document can be tailored to your circumstances, and can set out your specific contributions, and in addition to the purchase price, can include mortgage payments and household contributions. This will be referred to if you separate or wanted to sell the property. It would be beneficial to consider this before you exchange contracts, as the default position is 50/50. If you would be interested in considering a Declaration of Trust, we would be happy to assist, and this is something our Family Team can prepare for you, as an additional piece of work alongside our conveyancing.

Can you change your mind?

Of course. Circumstances change, and in the future, you may wish to change from joint tenants to tenants in common (severing the joint tenancy), or from tenants in common to joint tenants.

We can assist with the preparation of the paperwork required to make this change.

If you would like any assistance with your conveyancing, or further advice concerning joint tenants or tenants in common, our team would be delighted to assist.