This is the option most couples in a relationship will choose.
It’s where both of you own the whole of the property and when one of you dies the Right of Survivorship means that the person left behind inherits all the property.
This means that the person who has passed away cannot leave their half of the property, or a proportion of it to anyone else, the surviving partner however, can decide who to leave the property to whoever they wish.
The pros of Joint Tenancy
- It’s easy. You don’t have to work out exactly how much each person in the relationship contributes to the price of the property because whatever it is sold for is simply split between the two.
- If the relationship fails, then proceeds from the sale of the property is divided evenly between you both, or one might buy the other out by paying half the share.
The cons of Joint Tenancy
- There is no joint tenancy agreement. Joint tenants have a simple relationship so there is no need for a document that defines it in detail. This can cut down the work involved in the transaction but it doesn’t reflect unequal ownership. For example, where the parties involved have made an unequal contribution in financial terms. Even if one person has covered 80% of costs, they will still only own 50% of the property.
- Both parties must be involved in the sale of the property. This means the transfer needs to be signed by both of you. If mutual consent to sell can’t be established, it may be necessary to obtain a court order. When the sale has gone through the proceeds from the sale will be split equally as both joint tenants have the same equal interest in the property.
- If you do decide to separate and feel you’ve contributed more than your other half to the property, then you may have to hit the courts to help you decide, which of course is costly.
- Your share of the proceeds on death have to go to your partner. You couldn’t for example, leave a percentage of your half to a child from another relationship.
If a couple register as Tenants-in-Common they will, with the help of a solicitor decide on what proportion of the property each of them owns and this will be fixed from the start.
Tenants-in-Common should draw up a Deed of Trust. This document is not needed by law but is necessary for co-owners who want to ensure transparency when it comes to property ownership.
It will also be crucial if the relationship between the property owners breaks down.
A Deed of Trust (also called a Declaration of Trust) will set out the financial interests and responsibilities that each party has in the property.
This is flexible, if for example, one of you starts earning more than the other and their contribution shoots up the proportions can change and if you split up, you’ll know what percentage of the property you own.
The pros of being a Tenant-in-Common
- You know what percentage of the house is yours.
- It’s perfect for those who are not buying the property with someone they have a close relationship with – or the purchase is for investment purposes.
- Using a trust or deed, or setting it out in your will, you can leave your share of the property to another beneficiary such as a child from another relationship
- It can protect your assets. Joint Tenancy can be severed to become a Tenant-in-Common, to protect a partner from care home fees. It means that the debtors cannot collect their fees from a partner’s estate, only from the person who held the debt. The upshot is that if one estate has been decimated by these fees the other owner’s interests in the property will be protected.
- A smaller ownership share doesn’t mean limited rights to the property. For example, you may own just 20% of the property as a Tenant-in-Common but if you’re living in the property you will still have a right to access all of it.
The cons of being a Tenant-in-Common
- One thing to consider is how this change can affect the administration of your estate when you pass away. When a property is owned as Tenants-in-Common there is no survivorship clause, this means you can pass your percentage of the property to whomever you choose in your will. If you are leaving your share of the property to someone else a grant will need to be obtained.
- Although Tenants-in-Common own a distinct beneficial share of the property, as opposed to both owning the entire property, any sale still requires that both people sign the transfer deed if you want to sell. However, writing in an exit clause to the Deed of Trust can make it simpler to force a sale if the parties are not in agreement. When the property is sold, the proceeds are divided between the both owners based on the percentage share that each one holds.
- The division according to how much each of you has contributed may have an impact on your relationship. It may be looked on as unfair if, say, one partner has given up their career to look after children and doesn’t have the earning power to contribute.
How to change the way you own a property
You may need to change the way you own property when you’re writing a will. Perhaps you plan to leave your share of the property to someone other than the person with whom you jointly own the property?
For example, you may want to leave your share of the property outright to someone else or place the property into a Trust.
Leaving shares of property in a Trust is common when you want to protect against it being used to pay potential care home fees or if you want to allow your spouse/partner to live in your share for their lifetime but, upon their death or subsequent re-marriage, the property passes to your children. This would be done through something called a Trust Will.If you want advice on how Joint Tenancy and Tenants-in-Common would work for you contact Wafer Philips Solicitors at