Joint Tenants or Tenants in Common?

Legal Terms Explained

When it comes to purchasing a property, there are some important legal factors to take into consideration in order to avoid potential complexities and costs arising later on.

If you are buying a house with another person, you will need to think about whether you want to own the property as tenants in common or as joint tenants, and it pays to know the difference between the two before making your decision.

The choice you make will depend on your individual situation as well as the relationship you have with your partner (or co-purchaser), but it is important that you make the right choice for you as soon as possible just in case anything goes wrong further down the line that could cause hardship.

In this guide, we explain the differences between joint tenants vs tenants in common, the pros and cons involved with each and the importance of making a will, helping you make an informed decision when putting plans in place to protect your future.

In order to understand the meaning of tenants in common, we need to look at the meaning of joint tenants first.

Joint tenants - What does it mean?

If you want to co-own a house with somebody else, you can own it equally as joint tenants, meaning that both of you own the entire property, rather than just a specific share of it.

In the event that you want to sell the property, both co-owners would be legally entitled to receive half of the sale value. It does not matter if one person has contributed more or less towards the mortgage or bills than the other; each partner will receive exactly 50% - they do not own a share of the property that they can sell to someone else.

When one partner of a joint tenancy dies, the surviving co-owner of the property becomes the legal owner of the entire property.

Joint tenants with right of survivorship - What happens when a joint tenant dies?

It is important to note that when two people co-own a property as joint tenants and one co-owner passes away, the surviving partner automatically becomes the owner of the property, which is known in legal terms as the right of survivorship.

This means that if you have made a will that states exactly how you want your assets and estate to be shared out when you pass away, these wishes will be overridden by the right of survivorship. So, even if you have stated in your will that you wish to leave your property to someone other than the co-owner, the co-owner will automatically take full ownership of the home, despite what is stated in the deceased person’s will.

Learn more: Do I Need a Will?

A joint tenancy agreement is a great option for partners or married couples who know for certain that they want to leave their property to the surviving partner in the event of their death.

In the event that both co-owners should die at the same time, a legally-binding will needs to have been put in place to determine what will happen to the property and children, if there are any. If there is no will, the estate will be inherited in line with the intestacy rules.

To prepare for this, both partners may want to make mirror wills if they share the same wishes; if your wishes differ, you may prefer to make two separate wills.

Joint tenancy agreement with children from previous marriage/relationship

If you have children from a former marriage or relationship with someone else and you are now in a joint tenant agreement with your new partner or spouse, your children will not be able to inherit any of your property in the event of your death and it will be difficult for them if they want to contest this.

If you wish for your children to be able to receive some inheritance from your estate when you pass away, it is crucial that you write a legally-valid will that clearly states what share of inheritance you want them to receive.

If you wrote a will before your second marriage or relationship, you will need to update your existing will or make a new one if the changes are complex.

Read more: How to Make a Legally-Binding Will at Home

 

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Tenants in common - What does tenancy in common mean?

A tenants in common agreement means that each co-owner of the property owns a specific share of it. Generally, if a couple are tenants in common, they will decide to own a 50% share of the property each, but it is possible for each tenant in common to own a different portion to the other (60% : 40%, for example) - this is the primary difference between a joint tenancy and a tenancy in common.

It is important to note that if these unequal shares are not stated in the agreement, it will be assumed that both co-owners share an equal 50% each.

As each co-owner holds their own share of the property, they are entitled to pass it on to whoever they wish, provided it is stated in their will. Whoever you choose to inherit your portion, they will be listed as beneficiaries in your will.

What happens when one of the tenants in common dies?

If a tenant in common passes away without having a valid will in place, their individual share will be inherited as per the UK’s intestacy rules, which may not be in line with your intended wishes. For this reason, it is highly recommended that you make a will as soon as possible to ensure your share will be inherited by exactly who you want it to be.

Read more: What happens if you die intestate in the UK?

Who is a tenancy in common for?

A tenancy in common agreement would be a good option for partners who:

  • Want to co-own the property with their partner/spouse.
  • Want someone else to inherit their individual share when they pass away.
  • Have children from a previous relationship or marriage - As long as they have written a will, the parent will have peace of mind in the fact that their children are guaranteed to benefit from their share when they’re no longer here.
  • Want to try and reduce the costs related to any care home fees should they require this later on in life - a tenants-in-common agreement means that you will be ‘means tested’ on your share of the property only, and as this is lower than the full value, it may be able to help reduce fees.

 

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Severing joint tenancy - Should I change from joint tenants to tenants in common?

Some people may decide to sever their joint tenancy agreement for the following reasons:

  • Their relationship with the co-owner has changed.
  • One partner no longer wants the other to be entitled to receive the whole property when they pass away.
  • They wish to put half of the property share into a trust.

The process of doing this is relatively simple; the person who wishes to sever the agreement will need to sign and date a Notice of Severance. This Notice of Severance of joint tenancy will then need to be sent to the other co-owner, which they will need to sign and date themselves and return it to the person wishing to sever the agreement.

When the Notice of Severance has been returned and is dated and signed, it must be posted to the Land Registry so that legally, a restriction can be placed against the property. 

Whether you should cancel your existing joint tenant agreement and replace it with a tenants in common agreement is really down to you and your wishes, but it’s important that you make a decision based on what’s right for you and what you want to happen to your estate when you pass away.

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After reading about the potential advantages and disadvantages of being joint tenants vs tenants in common, you should be able to make an informed decision regarding the best choice for you.

It is highly important to remember that if you have specific wishes regarding what you want to happen to your estate and who you wish to receive a portion of inheritance when you die, you must clearly state your wishes in a legally-binding will - otherwise, your estate will be distributed as per the intestacy rules.

To get started today, all you need to do is register for free with us at Wills.Services by tapping the button below. For further advice and information, be sure to read our useful guides online or contact us to find out more.

 

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