Buying property together: Joint Ownership

If you are buying a property jointly with another you will be a co-owner of the property. Property can be owned by several people but only four can be named as registered proprietors on the Title Register.

There are two main ways that co-owners can hold property:

1. Joint Tenants; or
2. Tenants in Common

“Joint Tenants” and “Tenants in Common” are the legal terms used to describe how co-owners can hold property. Whilst the word “tenant” is used it does not have the same meaning as a tenant under a lease or a tenant who is renting from a landlord.

Joint Tenants

Where you choose to hold as Joint Tenants, all co-owners will jointly hold 100% of the property, regardless of the contributions made to the purchase price and as such there are no distinct shares attributed to each co-owner. Joint Tenants are, therefore, deemed to own property equally.

When holding as Joint Tenants, if one co-owner passes away the deceased co-owner’s share automatically passes to the surviving co-owner under the “right of survivorship”. In this instance, the surviving co-owner will then own the whole of the property and can leave this to whoever they wish under the terms of their Will or Intestacy. This may cause issues if the deceased co-owner’s intention was to leave their share to a specific beneficiary(ies) and not the co-owner.

If both Joint Tenants die at the same time, for example in a car accident, ownership of the property passes to the youngest co-owner’s relatives under their Will or Intestacy as the law presumes the oldest dies first. This could potentially cause a problem as the oldest co-owner could end up inheriting nothing even though they contributed more to the purchase price. This is why holding as Tenants in Common may be a better way to co-own property.

Tenants in Common

Where you choose to hold as Tenants in Common, each co-owner will hold a specific share in the property whether this is a percentage such as 50/50, 60/40, 70/30 etc or attributed to the financial contribution made by each co-owner. If the property is sold, the sale proceeds can either be split equally or unequally.

When holding as Tenants in Common, a co-owner’s share can be passed to another person either during the co-owner’s lifetime or under their Will. If a co-owner dies their share does not automatically pass to the surviving co-owner. If the deceased co-owner passed away without having made a Will, then their share will pass in accordance with Intestacy Rules.

Declarations of Trust

If you would like to hold as Tenants in Common, then we would recommend entering into a Declaration of Trust, which sets out the proportions owned by each co-owner and details what happens if the property is sold. For more information/advice as to entering into a Declaration of Trust, please call 01603 660811 and speak to our Private Client department.

Issues related to joint property ownership

• If unmarried you should consider entering into a Cohabitation Agreement. Please contact our Family department on 01603 660811 for more information or if you are considering entering into a Cohabitation Agreement.
• You should also consider making or updating your Wills to ensure that the property passes in accordance with your wishes. This is particularly important if you hold as Tenants in Common and wish to leave your share to a specific beneficiary. Please contact our Wills, Trust and Probate department on 01603 214 220 if you would like to make or update your Wills.

Abbey Englefield-Stangroom is a Chartered Legal Executive specialising in Residential Property. If you would like to discuss joint ownership please email [email protected].