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Joint Tenancy and Tenants in Common: Everything you need to know
Whether you are buying your first home with a partner, or you have inherited a property after a loved one has passed away, it is important to understand how joint ownership of a property works, and what your joint ownership options are.
Our Property Conveyancing Solicitors have put together this comprehensive guide to help you understand what you need to know.
A guide to joint property ownership:
If I am on the mortgage, do I own the property?
Just because you are named as a party to the mortgage, it does not necessarily mean that you are named as a legal owner of the property. First and foremost, this means that you are legally responsible for payment of the whole, or part of, the mortgage.
What is Joint Tenancy?
Joint Tenancy is the default form of shared property ownership, where between 2 and 4 people can jointly co-own a single property together. In the eyes of the law, the co-owners are collectively considered as one owner, and all have an equal right to the entirety of the property.
Because of this total ownership of the property, if the owners involved take out a mortgage on the property, they are each liable for the entirety of the mortgage, rather than their share alone. This means that if one party fails to meet their mortgage payments, the bank or lender can go on to obtain these missing payments from any, or all, or the other owners.
It also means that the owners must collectively make the decision to sell the property, or it cannot be done. While available for up to four owners, this type of property ownership is most commonly used by couples who combine their finances to buy a property together as one joined owner.
This form of ownership is also known as the ‘survivorship principle’. This, essentially, means that if one registered owner were to pass away, then the property would automatically vest in the remaining joint owners, under this principle. This means that, under this form of ownership, one owner would be unable to dispose of their share, without the same first passing to the co-owner(s). If a registered owner wished to leave their share in a property to a family member, for example, by way of their Will, they would be required to opt for ownership as a tenant in common, which we discuss in further detail below.
What is a Tenancy in Common?
Alternatively, Tenants in Common are owners who purchase a property together, but co-own separate shares in the property, which are not always equal.
Depending on their situation, one owner may own 75% of the property, while the other only owns 25%, for example. Because of this separation of assets, tenants in common are able to leave their shares of the property in a Will, something which cannot be done under joint tenancy.
Generally speaking, tenants in common is a much more common property purchasing method for friends or business partners who purchase a property together, rather than a couple.
Which is better tenants in common or joint tenants?
When you purchase a property with at least one other person, you must register the property with the Land Registry into both, or all of, your names. There are a few different ownership options, which our Property Conveyancing Solicitors have discussed the potential benefits of in detail, below.
What are the benefits of being Joint Tenants?
The two owners of the property will own it jointly between them.
This option is commonly used by couples who are buying a property together.
When one joint owner dies, the property will pass automatically to the other joint owner.
You cannot leave your share of the property to anyone else under your Will.
What are the benefits of being Tenants in Common?
If you want to own different shares of the property, or you want to each own your respective share, this is the best option for you.
If more than two people are purchasing a property together, this is more often than not the most suitable option, so that each party can own their own share.
Rather than passing to the survivor, if one party dies, their share will either pass under their Will, or under the Rules of Intestacy. Our Wills, Trusts, Tax and Probate Solicitors have explained how these rules work, here. This is great if you want to leave your share of your property to your children, for example, if you are buying a property with a new partner or spouse.
How to change a property from Joint Tenants to Tenants in Common:
If your partnership ends and you wish to protect your share of your property, our Property Conveyancing Solicitors would strongly advise that you change the tenancy from joint tenants to tenants in common. You can do this by severing the joint tenancy, using a Notice of Severance.
If you do not sever the joint tenancy, regardless of whether you would want your ex-partner or spouse to inherit the property, they would receive your share of the property if you passed away. That’s why it’s imperative to discuss severing the joint tenancy with our expert Conveyancing Solicitors. You can contact the team online, here.
What happens to the property if my partner or spouse loses mental capacity?
Whether a property is owned as joint tenants or tenants in common, all legal owners will be required to jointly make any decisions about the property. For example, if two people own a property, both will be required to sell, transfer or re-mortgage the property together.
If your joint owner loses capacity and is unable to make decisions about your property, you can make an application to the Court of Protection for an Order, which would allow you to make decisions on behalf of your co-owner. Sadly, this application can be complex, and you should always seek advice from our expert Wills, Trusts, Tax and Probate Solicitors before attempting to make this type of application yourself. You can contact them online, here, or by email to firstname.lastname@example.org.
How do I know if I legally own a property?
Sadly, our Wills and Probate solicitors are often approached by people who have lived in a property for their whole married life, without realising that they never actually owned it all, or that their name was not registered on the property deeds whatsoever. Our Family Law and Divorce solicitors often encounter the same problem: a couple separates, and one of the cohabitees realises that they are not a legal or beneficial owner of the home.
There are two types of property: those that are registered, and those that are unregistered.
Since the introduction of the Land Registration Act 2002, most properties are now registered with an organisation called the Land Registry. The Land Registry is in charge of a national land register, which holds details of land, such as who owns it, and whether it is subject to any mortgage or charge. If you have any queries about who owns your land, you should contact the Land Registry and ask for a copy of the register. This usually costs around £3.00 to obtain and you can contact them online, here.
For properties that were purchased before the introduction of the Land Registration Act (and a few others, for various other reasons), they may not be registered. The official owner of the property could be found in the original title deeds.
Quite often, if the property is subject to a mortgage, the mortgage company themselves may hold these. However, if there is no mortgage, your local property solicitors may hold these on your behalf. Alternatively, these may have been sent to you (perhaps a long time ago), so you have hopefully put these somewhere safe.
Can I protect myself if I am not named as an owner?
If you are married or in a civil partnership and you live in a property with your significant other, you could be afforded protection under matrimonial home rights. These protect your right to live in the property that you have lived in during your marriage or civil partnership, even if you do not legally own a share of the property.
To discuss your matrimonial home rights, contact our expert Family Law and Divorce Solicitors, here.
How can MG Legal's conveyancing solicitors help?
Here at MG Legal, our conveyancing solicitors are fully-qualified, and well-experienced in all types of joint property ownership. If you are considering buying a property with another person, make sure that you protect yourself. You can contact our team of Property Conveyancing Solicitors to discuss your new purchase and to receive first-class, expert advice about how to own your new property, or see a full overview of our fixed fees, here.