Tenants in common vs joint tenants
In the UK, when multiple people decide to buy a property together, they need to understand the legal structure of their ownership. There are two main types: joint tenancy and tenancy in common, not to be confused with renting.
Joint ownership is a common choice among property buyers, especially couples in relationships, regardless of marital status. This arrangement provides a sense of financial security that purchasing separately may lack. Legally, cohabiting owners are termed 'joint tenants at law.' Nonetheless, it's essential to recognize that there are diverse types of joint ownership with differing legal implications
Joint tenancy explained
Joint tenancy is a form of joint ownership commonly utilized by couples, although it's not exclusive to them. In this setup, each party owns an equal share of the property, regardless of their contribution to the purchase. Essentially, all joint tenants collectively own the entire property.
Tenancy in common explained
On the other hand, tenancy in common presents a different approach to joint ownership. Here, individuals have specific percentage shares of the property, as outlined in a legal agreement. Upon the sale of the property, proceeds are distributed according to each person's share.
One notable feature of tenancy in common is its flexibility. Share percentages can be adjusted to accommodate changing circumstances or life events. For example, a person with a 25% share could increase it to 40%, subject to mutual agreement
What’s the difference between joint tenancy and tenancy in common?
The primary distinction between joint tenants and tenants in common lies in what happens upon the death of one of the owners. In joint tenancy, the deceased's share automatically transfers to the surviving joint tenant(s), without the option to bequeath it to another individual. Conversely, tenants in common have the freedom to leave their share to beneficiaries such as children or family members.
Joint tenancy vs tenants in common: The pros and cons
Joint mortgages offer a way for couples or groups of friends to purchase property together. This arrangement shares financial responsibility and establishes joint ownership. While it can increase lending potential based on joint income, it also means relinquishing sole financial responsibility. This means that if one party has a poor credit history or struggles with mortgage payments, it could affect the credit rating of all co-owners. In such cases, there's a risk of the property being repossessed, as each owner shares accountability for the mortgage.
Rights under joint ownership
Joint ownership grants equal rights to possession and occupation of the property among co-owners. However, decisions regarding the property must be unanimous, and consent is required for any action, including sale.
Tenants in common have a right to occupy which means that each co-owner in a tenancy in common arrangement has the right to use and live in the property according to their share. So, if you own 50% of the property, you have the right to occupy and use half of it.
Ending joint ownership
Either party in a joint tenancy or tenancy in common can terminate the arrangement by serving a written notice. While consent from other parties isn't necessary, informing the Land Registry is essential to place restrictions on the property until the matter is resolved or agreements are made among the co-owners.
Frequently Asked Questions
How do I switch from a Joint Tenancy to a tenancy in Common?
This frequently occurs when married couples separate, relationships end, or when couples seek clearer ownership arrangements. To transition to a tenancy in common and define ownership shares, joint owners must mutually agree to sever the joint tenancy. They'll need to apply for a Form A restriction with the Land Registry, completing and signing the appropriate section of the Form SEV.
How do I switch from a tenancy in Common to a Joint Tenancy?
To make this change, you'll require consent from the other joint owners and must adjust the terms of the Deed of Trust. A conveyancer can assist you with this process, ensuring all necessary documents are accurately completed and included in the application
What is a Deed of Trust?
A deed of trust is a legal document outlining financial contributions to the property and provisions for various scenarios like sale or relationship changes.
Which is better, joint tenants or tenants in common?
It really depends on individual circumstances, such as inheritance plans or relationship dynamics. If you want to ensure your children inherit a share of the property, tenancy in common might suit you better. However, if simplicity is your priority, joint tenancy could be preferable.
I’m married, which tenancy should I choose?
While most prefer joint tenancy for clarity in inheritance, tenancies in common offer added legal protection, especially in potential divorce scenarios.
We can help you find your perfect property
Whether you choose joint tenancy or tenancy in common, it's essential to understand the implications and seek expert guidance to make well-informed decisions.
At Haybrook, we're passionate about turning your dreams into reality! We guide you through the intricacies of property ownership so that you focus on the exciting stuff! Reach out to us today to find your ideal home in your desired location!
