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Joint tenants vs tenants in common
A house, flat, car, boat, bank account – indeed any jointly owned property – can be held in one of two ways: as ‘joint tenants’ or ‘tenants in common’. The effect of owning property on each of these bases is very different. If you are a joint owner, it’s crucial to understand which is right for you –
joint tenants vs tenants in common.
What is a joint tenant?
Ownership of property as joint tenants is not suitable for everyone. However, legally, it’s the default status unless and until at least one owner says otherwise.
You can view property owned as joint tenants as indivisible. In other words, ownership is equal but with no defined shares. If one owner wishes to sell the property, the other(s) must agree or buy them out. If the other owner(s) refuses to cooperate, the court can order a sale of the property.
However, perhaps the most significant effect of owning as joint tenants is what happens if one owner dies. In that situation, the deceased owner’s share passes automatically to the survivor(s), who then owns it outright. This happens irrespective of the terms of the deceased owner’s Will. For example, suppose A and B own a house as joint tenants. But in their Will, A has left their entire estate to C. On the death of A, ownership of the house passes automatically to B, not C, despite the terms of A’s Will.
What is a tenant in common?
Tenants in common own a separate share of the property. Each share is equal unless there is evidence that the parties have agreed to a different ownership ratio.
As each party owns a distinct share, they can do with it as they wish. If one owner wants out, the other(s) must agree. That will necessitate a sale of the whole property, or the other owner(s) buying the share, or a non-owner buying the share. And if one owner dies, their share passes according to the terms of their Will, or failing that, under the intestacy rules.
Severing a joint tenancy
As mentioned above, the default joint ownership position is a joint tenancy. However, there are various reasons why one or more joint tenants may decide to sever the joint tenancy. Typical scenarios are:
- addressing unequal contributions to the purchase of the property.
- creating defined ownership shares if a couple separate.
- for tax purposes as depending on the property’s nature and use, owning as tenants in common sometimes offers greater tax efficiency.
Severing a joint tenancy to create a tenancy in common is a straightforward process. In theory, it’s as easy as telling your joint owner(s) that the joint tenancy is severed. But as evidence, you should serve on the other owner(s) a written notice of severance, even though in most cases severance is by agreement.
There can be some difficulty if one or more joint owners’ whereabouts are unknown or it’s impossible to serve them with notice for another reason. But your solicitor will be able to advise you on how to proceed in that situation.
If the jointly owned property is a building or land, you must inform the Land Registry using Form SEV. Your solicitor can assist you with that.