Joint tenants v tenants in common

When you buy a property with another person or people, you can either buy as ‘joint tenants’ or ‘tenants in common’. It is important to consider both options to decide which is the most suitable for your circumstances. Clients often ask us the difference between the types of joint property ownership within conveyancing transactions. Let’s take a look:

What does joint tenants mean?

  • As joint tenants, owners will jointly hold 100% of the property.
  • In the event of the sale of the property, the sale proceeds would be distributed in equal shares.
  • If one of the owners dies, that owner’s legal share would pass automatically to the surviving person’s ownership. This is known as “right of survivorship”.
  • The property will automatically pass and does not form part of the deceased person’s will.
  • You cannot alter joint tenant ownership by making a will. If a will made by a joint tenant attempts to leave the property to someone other than the surviving owner, that section of the will would be ineffective.
  • This type of ownership is usually the most popular with married couples.

What does tenants in common mean?

  • As beneficial tenants in common, owners each own a portion of the property.
  • The shares can be equal e.g. 50%/50%, or unequal e.g. 70%/30%.
  • In the event of sale, the sale proceeds will be split as per the percentages stated.
  • If one one of the owners dies, the deceased’s share of the property would pass in accordance with their will. If there is no will in place, under the Intestacy Rules instead.
  • It is important when holding a property as beneficial tenants in common that you have a will in place which accurately represents your wishes.
  • Who does this type of ownership suit? Couples who are contributing unequal amounts to the property; friends or family members.

Do I need a declaration of trust?

  • For parties contributing unequal shares, you can protect your interest by instructing a solicitor to draw up a declaration of trust. This is to ensure that the sale proceeds are split in accordance with the level of contributions made to the equity in the property.
  • The declaration of trust is a legally binding document and therefore the terms must be honoured.
  • Further, your solicitor can register the declaration of trust as a restriction on the title of the property.
  • In the event of sale of the property, the solicitor acting would obtain a copy of the declaration of trust to ascertain how the monies are to be distributed.
  • A declaration of trust can be useful if one purchaser’s parents are gifting the deposit to a couple purchasing a property. They can ensure that, in the event of a split, the parents would receive their contribution back prior to the sale proceeds being split.
  • Owners who will be paying unequally to the mortgage find declarations of trust useful also. This can then be reflected in the event of sale.

For further advice with regards to joint property ownership, declarations of trust or wills, our specialists can help. Contact our residential conveyancing and / or wills team today on 0800 988 7756 for a FREE initial discussion.