Jointly owned property: Should you own property jointly as Joint Tenants, or as Tenants in Common?
When property is bought jointly it is essential to distinguish whether that jointly owned property is to be owned as Joint Tenants, or as Tenants in Common. But what is the difference between the two forms of joint ownership, and why is the distinction so important?
Joint Tenants
The assumption when owners hold property as Joint Tenants is that when it is sold the net proceeds will be divided equally.
The most significant aspect of a Joint Tenancy is that on the death of one of the owners, their share will automatically pass to the remaining joint owner(s). Lawyers refer to this principle as ‘survivorship’, and it is important to note that it overrides what is in the Joint Tenant’s will.
A Joint Tenancy can be brought to an end by a process known as severance. There are strict rules governing how a Joint Tenancy should be severed and our solicitors will be happy to talk this through with you and prepare all the necessary paperwork.
Tenants in Common
When holding property as Tenants in Common, owners should define their respective shares in the property—usually as a percentage. A Tenancy in Common is appropriate when joint purchasers are contributing funds in unequal amounts and would like to ensure that this is reflected in the share of the property they own.
Unlike a Joint Tenancy, on the death of a Tenant in Common their share in the property will pass in accordance with the terms of their will—or under the rules of intestacy if they do not have one.
Once the percentage split has been agreed, our solicitors can prepare a legal document known as a Declaration of Trust, setting out the shares in which the property is held so it is clear when the property is sold and the sale proceeds need to be divided, or one of the owners passes away.