When you purchase a property with someone else, you will be asked how you want to own the property. In England and Wales, a property can be held as either joint tenants or tenants in common. However, each ownership is different so let’s explore what they are and what you can do with the share as this is important for the purposes of will writing.
Joint Tenants
If you hold your property as joint tenants with another person, this means that both owners own a 100% of the property, rather than having separate shares. Each owner has equal rights to the entire property and if the property is sold you will each be entitled to an equal share of the proceeds.
A joint tenancy creates rights of survivorship. This means that if one of the co-owners should die, their share will automatically transfer to the surviving co-owner regardless of what is stated in the Will. For example, if a married couple own their home as joint tenants and one spouse dies, the surviving spouse will automatically become the sole owner of the property.
Advantages v’s disadvantages:
Advantages: –
- Enables your share of the property to automatically pass to the co-owner on your death
- The ownership is simple
- Would not necessarily require probate where assets are held jointly.
- Provides some stability to the co-owner who knows they will solely own the property on the other owners death.
Disadvantages: –
- Less flexibility due to an inability to gift the share of the property to someone other than the co-owner in the Will.
- All owners have equal rights to the property
- Once passed to the survivor, they can do with the share as they wish or it could be exposed to issues such as debt, bankruptcy or even lost to care if they go into care.
Tenants in Common
If you hold your property as tenants in common, you will each have a divided share in the property. This is often an equal share, but it is also possible to hold the property in unequal shares. This is an attractive option for people purchasing a property together and contributing different amounts towards the deposit.
Under a tenancy in common, each owner can deal with their share in the property separately, allowing them to gift their share to their own beneficiaries by their Will.
Advantages v’s disadvantages:
Advantages: –
- Provides the ability to gift your share of the property to whomever you wish
- Enables the share to go into a life interest where the life tenant is provided for in lifetime but the property ultimately ends up with someone else.
- Offers protection for blended families.
- Enables owners to have unequal shares in the property.
Disadvantages: –
- Probate may be required.
- Gifting different shares to people would need the consent of all owners to sell
- Less stability or security for the co-owner
How can you check how a property is held?
Your will writer will check your title deeds to see how your property is held and advise you accordingly.
If you hold your property as joint tenants and wish to amend this to tenants in common, this can be done by completing a notice of severance and sending a SEV form to The Land Registry so that your title deeds can be updated.
It is important to consider how your property should be held and the above will hopefully highlight to you that there are both advantages and disadvantages of holding your property as joint tenants or tenants in common. However where you want to your share of the property to go into a trust on your death, it is imperative for the property to be held as tenants in common.
For more information, please speak to one of our will writers today.
