When a property is purchased by more than one person, you will each be a co-owner. As co-owners, you can either hold the property as Joint Tenants or as Tenants in Common.
Joint Tenants• If you hold a property as joint tenants, both of you will own the whole of the property. You will not each have a specific share in the property and will not be able to leave a share of the property in your Will.
• If you sell the property, it will be presumed that you both own the property equally, regardless of each of your contributions to the purchase price.
• If one of the co-owners dies, their interest in the property would automatically pass to the other co-owner. The surviving co-owner would then own all of the property and on their death, it would form part of their estate. This is known as the "right of survivorship".
Example reasons for becoming joint tenants: married couples or those in a civil partnership commonly use this method because the right of survivorship makes it straightforward to inherit each other's share in the property.
Tenants in Common• If you hold the property as tenants in common, each of you will own a specified share in the property. Your shares may be equal, but they do not have to be.
• Your share of the property can be passed on to another person on your death, either under your Will or in accordance with the rules of intestacy (if you do not have a Will).
• If co-owners want to hold the property as tenants in common, this can either be noted as a simple declaration in the Transfer Deed or you can sign a Declaration of Trust.
A Declaration of Trust is a document that formally records that you hold the property as tenants in common and sets out your respective shares in the property. If you sell the property, or if you separate, the Declaration of Trust will be referred to, to work out your entitlement to the sale proceeds.
Example reasons for becoming tenants in common: if one of the owners has made a larger contribution to the purchase price of the property and wants this to be recognised if the property is sold or if one owner has a family from an earlier marriage and wishes to leave their interest in the property to them, instead of passing it to the other co-owner
This is something that you should keep under review following the purchase of a property. If you decide to hold the property as joint tenants but then wish to split your interests, you can "sever" the joint tenancy and turn it into a tenancy in common at any time. The joint tenancy may also be severed automatically in several situations, including where one co-owner becomes bankrupt.
It is important to specify how you wish to hold the property, to avoid any uncertainty in the future. If you have any questions regarding this then please feel free to contact our Conveyancing team to discuss.
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