Joint tenants or tenants in common – do you know the difference?

Buying property with someone else – whether a partner, relative or friend – is an exciting venture, but it can give rise to complex issues. One of the most important choices you must make is how the property will be held – either as joint tenants or as tenants in common. But do you know the difference?

If you own a property as joint tenants:

Each owner has equal rights to the whole property, regardless of whether one person contributes more towards the property’s deposit or mortgage.

If you own a property as tenants in common:

Each owner can have a different share of the property. For example, you might own 60% while your sibling owns 40%.

What are the implications?

How you own your property can have significant consequences further down the line, especially if the relationship breaks down or an owner dies or becomes mentally incapacitated, and the property needs to be sold.

If you separate from your partner:

As joint tenants – if you decided to sell the property, both would need to agree, then the sale proceeds would be divided equally. If one party believed they deserved a greater share (ie. if they contributed more financially to the property), they would likely need to seek legal support. In the absence of a declaration of trust at the time of purchase, which specifically records unequal contributions and agrees what should happen on a future sale, it is unlikely that you would succeed in a claim for a greater share in the sale proceeds.
As tenants in common – it will be assumed that you have equal shares in the property, unless you have prepared a Declaration of Trust. This is a legally binding document that clarifies each person’s share in the property. So, if one person contributes more towards the property financially, this can be taken into account.

If a co-owner dies:

As joint tenants – the property automatically passes to the other (this is called the right of survivorship). This means you cannot pass on your share of the property to someone else in your will.
As tenants in common – the co-owner’s share does not automatically pass to the other owner. Instead, you can pass on your share of the property to someone else in your will.

If a joint owner becomes mentally incapacitated and they have not made a Lasting Power of Attorney (LPA), selling or managing the property can become extremely difficult. See our article on LPAs for more information on this.

Here to help

Our friendly team of experts can help you understand co-ownership and make sure your current arrangement still suits you. To find out more, please do not hesitate to contact Lesley-Ann Mayhew or Katharina Vidojevic.