Tenants in common vs joint tenants – advice for cohabiting couples who are separating
If you jointly own a property with someone you can hold the property in one of two ways: either as joint tenants or tenants in common .
For many they will be joint tenants or tenants in common with their partner. If you split up, how you hold the property will determine how any proceeds of sale should be split between you.
This blog will help you if you're cohabiting with your partner, have property and are separating/separated. It will explain the difference between Tenants in Common and Joint Tenants when it comes to your rights over jointly held property. We've included essential advice for cohabiting couples who are separating or separated and have a property and we aim to explain the difference between tenants in common versus joint tenants when it comes to your rights over jointly held property.
What is tenancy in common?
Tenancy in common, as opposed to joint tenancy, is a situation in which two or more people have ownership interests in a property.
There are several key aspects of tenancy in common:
- Owners can have unequal shares in the property
- Each owner has a distinct and separate share of the property
The right of survivorship - tenancy in common:
Unlike joint tenancy, tenants in common in England and Wales does not include the ' right of survivorship '.
Each owner has the right to leave their share of the property to any beneficiary upon their death (more typical in cohabiting couples and flat sharers).
When an owner dies, their share does not automatically transfer to the other owners but is passed on according to their will or the laws of intestacy.
What is joint tenancy?
Joint tenancy is a situation in which two or more people share equal ownership of the property and have the equal, undivided right to keep or dispose of the property.
There are five key aspects to joint tenancy:
- Joint tenants must have equal ownership shares in the property
- Joint tenants must have the same type of ownership interest in the property.
- Joint tenants must acquire the property through the same legal instrument, such as a single deed or a joint purchase agreement.
- Joint tenants must acquire their ownership interest in the property simultaneously.
- Joint tenancy requires the voluntary agreement of all parties involved.
If you’re a cohabiting couple, you must both agree on what to do with the property.
The right of survivorship in joint tenancy
The property cannot be sold from under you. If you die, your share automatically passes to your partner, of if you’ve separated your ex-partner. The surviving joint tenant(s) become the sole owner(s) of the property.
How should share of the property be distributed?
If you hold the property as tenants in common, you may well have specified your contribution at the outset of the purchase. This is typical if one of you has put more in than the other and you agree you want to get out what you put in.
You will have to agree on how any increase in the market value will be dealt with – either agreeing that any increase in value is split based on contribution or if you have paid the mortgage equally then split 50/50. You may well have a trust deed that spells out how the matter should be decided as most conveyancing solicitors would have drawn this up for you when you purchased (go back to your conveyancing solicitor if you can't remember).
However, if you hold the property as joint tenants, there is a presumption that you hold the property in 50/50 shares irrespective of what was put in at the start. You can obtain a copy of the title deeds easily from the land registry website if you do not know how you hold the property.
How to change a joint tenancy arrangement to tenants in common?
It is generally possible to change from joint tenants to tenants in common.
The process of changing from joint tenants to tenants in common is commonly referred to as ‘ severing the joint tenancy ’.
Severing the joint tenancy means that the co-owners no longer have the right of survivorship, which is a key characteristic of joint tenancy.
Instead, each co-owners share becomes distinct and can be passed on to their chosen beneficiaries upon their death.
This should be the basis of any negotiation you have with your partner. amicable offers negotiation service that you. Please click here to book an initial free 15-minute advice call with one of our experts.
What happens when one of the tenants in common dies?
In general, when a tenant in common dies, their share of the property does not automatically pass to the other co-tenants. Instead, it becomes part of their estate and is subject to distribution according to their will or the laws of intestacy if there is no will.
What happens when someone living in joint tenancy dies?
When someone living in a joint tenancy dies, the surviving joint tenant(s) generally inherits the deceased person's share automatically. This is known as the ‘right of survivorship’.
Which is higher, joint tenants or tenants in common inheritance tax?
Whether you are joint tenants or tenants in common, inheritance tax is not solely determined by the tax rate. In England and Wales, inheritance tax is generally determined by the overall value of the deceased person's estate, rather than the specific form of ownership, be it as a tenant in common or a joint tenant.
Does a will override tenants in common?
Yes, a will can override the default rules of property ownership, including the tenancy in common.
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