Joint Tenants or Tenants in Common? What do they mean?

If you are intending on purchasing a property with another person, you will need to consider how you both would like to hold the property. The type of ownership affects what you can do with the property if a joint owner dies or your relationship breaks down.

Under the common law, a property can be jointly owned in two ways. This can be either by Joint Tenants or by Tenants in Common.

Joint Tenants

If the property is held as joint tenants then both parties will have equal rights to the whole property

What happens if we sell the property?

If you consider selling your property in the future, the sale will not be valid without the Contract and Transfer deed being signed by both joint owners. The sale proceeds will then be sent to an account where it can be accessed by both joint owners unless otherwise agreed in writing between both parties.

What happens if one of the joint owners dies?

In the case of when one of the joint owners dies, the surviving owner automatically and instantly becomes the sole owner of the whole property. This is known as the rule of survivorship. The survivor is entitled to receive the whole of the net sale proceeds. If the deceased owner created a Will that left the property to someone, the Will will have no effect on the ownership of the property and it will not stop it from passing entirely to the survivor.

Tenants in Common

If property is held by two people as Tenants in Common, both parties are the legal owners of the property but each owner has a separate and distinct share in the property which remains his or her property at all times.

What happens if we sell the property?

If you consider selling your property as Tenants in Common, again both parties are required to sign the Contract and Transfer deed and each is entitled to receive the net proceeds of his or her own share. 

What happens if one of the joint owners dies?

The deceased owners share remains part of his or her estate and would then pass to a third party in accordance with the provisions of his or her Will or under the Rules of Intestacy if no will exists.

If the property is sold following the death of the joint owner, the surviving owner and the Legal Representative of the deceased owner are required to sign the Contract and Transfer Deed and the net sale proceeds would be divided between the surviving owner and the estate of the deceased in accordance with their shares in the property.

Equal Shares

The parties may agree that the property is held in equal shares even though one party may be making a larger financial contribution than the other towards the purchase and running of the property.  If the property is sold, the net sale proceeds will be divided equally regardless of the contributions to the purchase.

Unequal Shares

The joint owners may decide that the property should be held in unequal shares to reflect individual financial contributions made towards the property. The Transfer deed will reflect the shares are unequal. The individual contributions from each person will be set out in a document called a Declaration of Trust. The trust deed may also contain provisions setting out the procedures to be followed if the relationship breaks down and one party wishes to remain in the property and acquire the interest of the other.  

Our Conveyancing team at Johnson Astills can assist you in your sale and purchase transactions and provide you with further information and guidance on joint ownership. Please contact us on 0116 255 4855.