‘Joint tenancy’ and ‘tenancy in common’ are terms to describe the way in which two or more persons can own property together.
The question of whether you should hold property as joint tenants or tenants in common is only relevant where there is more than one purchaser, and not if you are buying property and you will be the sole owner.
Why Does It Matter?
The question of whether you hold your property as joint tenants or tenants in common is very important, for many reasons. The main reason is that it dictates what happens to the property after one property owner dies.
What Does ‘Tenants In Common’ Mean?
Owning property as tenants in common with one or more other people simply means the ownership of the property is split.
The split can be 50%, or some other percentage agreed on between the co owners. For example, three people could co own a property in unequal shares, in a 60%/30%/10% split.
With a tenancy in common, where one person dies, their share of the property does not automatically pass to the other owners; instead, it will become part of the deceased’s estate to be distributed according to their will.
What Does ‘Joint Tenants’ Mean?
If property is owned as joint tenants, it means the whole property is owned jointly. When one of the joint tenants dies, the property will automatically pass to the surviving joint tenant or tenants. This is known as the ‘right of survivorship.’
Because the deceased’s interest automatically passes to the other joint tenant(s) once one owner dies and does not form part of the estate of the deceased joint tenant, this is a common arrangement for a married couple or people in long term committed relationships.
Joint Tenancy vs Tenancy In Common And The Conveyancing Process
When you are purchasing property with one or co owners, your conveyancer will ask whether you wish to hold the property as joint tenants or tenants in common.
This information is put on the transfer documents and recorded on the property title. If you require legal advice about what type of ownership is right for you, your conveyancing solicitor will be able to provide it.
What Kind of Property Ownership Is Right For Me?
When it comes to owning property jointly, everyone’s situation is different, and there are many things to consider when deciding whether to own property in a joint tenancy or a tenancy in common, including the following;
What do you want to happen to the property if one of the owners dies?
Is the property going to be your home or is it an investment property? How the property is held and the size of the share in the property has implications for your tax liability. You should seek advice from a financial planner before you make a decision.
What relationship do you have with your would-be co-owner(s)? If they are your spouse or long-term partner, a joint tenancy might be the right decision. If you are buying with a friend, sibling or business partner, a tenancy in common might be more appropriate.
There are benefits and drawbacks to each kind of property ownership, and it is critical that you seek legal advice from a property lawyer and financial planning advice if appropriate to ensure the decision you make is right for you and your interests are protected.
If you are buying or selling property, you’re probably hearing a lot of unfamiliar legal jargon, and the terms ‘joint tenants’ and ‘tenants in common’ are just the tip of the iceberg!
At Keylaw, we are conveyancing specialists. If you have questions about joint ownership of property or any other aspect of conveyancing, contact one of our friendly, experienced conveyancing solicitors today.
The above is not legal advice and is general information only.
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