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Insight | For Individuals

How should you own your property? Joint Tenants v Tenants in Common

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If you are purchasing a property between two or more people then you will be asked how you wish to hold the property. There are two answers to this question, either as Joint Tenants or Tenants in Common. It is very important to understand the difference between these, and how they can affect you both now, and in the future.

Joint Tenants

This is when two or more Joint Tenants own the whole of the property, and there are no definable shares attributed to each. This is regardless of unequal contributions to the deposit or mortgage payments.

On the sale of the property, all parties are due an equal share of the proceeds.

If one party dies, the property passes automatically to the other Joint Tenant. This cannot be overridden by a will.

Tenants in Common

This means that each co-owner owns a specified share of the property. This can be 50% each or any other percentage agreed between the parties, to reflect for example, unequal contributions to the purchase.

If you want to hold the property as Tenants in Common, then it is advisable to enter into a Deed of Trust, setting out your shares and what is to happen on the sale of the property. It is also important to have a Will advising who should inherit your share of the property.

On the sale of the property, each party would be entitled to the percentage agreed. Any payments would usually be made from the net sale proceeds. This means that, once all costs of sale have been deducted (Estate Agents fees, legal costs etc), the remaining funds would then be split between the owners in the agreed shares.

Each party can also leave their share of the property in their will to anyone they wish, including a third party.

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What should you consider when making this decision?

Most married couples are happy with a Joint Tenancy, as they are most likely to leave the property to each other on death and the property being jointly owned fits in with the idea of joint marriage assets. Some of the exceptions to this are when there are children from previous relationships or if it is a large estate or an estate with multiple properties, in these cases estate planning considerations may show that Tenants in Common may be more suitable.

For any other situation, it is advisable to own the property as Tenants in Common and ensure that both a Deed of Trust and individual Wills for each owner are in place. This protects every individual owner’s interest, especially if there is an unequal contribution. Deeds of Trust can also be used to alter the shares in a property if certain conditions are met or set out what is to happen if the parties disagree on the future of the property. It also allows each share to be passed to different people either via a will or intestacy on the death of an owner.

It is possible to swap from one type of ownership to another and can be advisable to do so as relationships and circumstances change.


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