When you purchase a property jointly, the co-owners should always be asked how they wish to hold the property as joint owners and generally there are two options;
- Joint Tenants – this means that the parties are presumed to hold the property in equal shares. If, on the death of one owner, the method of ownership has not changed then, despite any terms written in a Will, ownership of the property will automatically pass to the survivor named on the title deeds.
- Tenants in Common – joint owners of a property can choose to hold in this way and the shares will usually be specific, either equal shares, or percentage shares as the parties may agree. On the death of one owner where property is held in this way, the deceased’s share will not automatically pass to the surviving co-owner of the property but will pass under the terms of a Will or under the Intestacy Rules if there is no Will. For this reason we would always advise that parties choosing to purchase as Tenants in Common make a Will as soon as convenient following a purchase although irrespective of how you hold a property it would always be beneficial and advisable to have a Will.
The reasoning behind joint buyers choosing tenants in common over joint tenants can be dictated by personal circumstance, for example, one party wishing someone other than their co-owner to benefit by their share in the property, or by financial input, for example, one party putting in the deposit and wishing to ‘ring-fence’ that in the event of a fall out or subsequent sale. In this event, a conveyancer may recommend a deed of trust be prepared specifically stating each owner’s percentage or monetary share in the property but in any case where property is held as tenants in common, those owners should make a Will to determine who will benefit by their share on death.
The option reached by joint buyers will ultimately be reflected on the title registers at registration of the purchase with the Land Registry.
A choice initially to hold property as joint tenants is capable of being reverted to tenants in common should circumstances and wishes change, generally termed a ‘severance of the joint tenancy’.
There are, however, circumstances where the joint tenancy can become severed by third parties, changing a joint tenancy to a tenancy in common. Where there has been borrowing by one party secured on property owned jointly with another and that borrowing is then secured against the property by a legal charge registered on the title, any joint tenancy is automatically severed and ownership reverts to the position where the proprietors then hold the property as tenants in common in equal shares.
Similarly where one of two property owners declares himself or herself bankrupt, the joint tenancy is converted to a tenancy in common and that bankrupt party’s share in the property is held for the trustee in bankruptcy.
If you wish to review the way in which you hold property owned with another and/or are conscious that you hold a property with your co-owner as tenants in common and never got around to making the Will to support that choice, please telephone us on 01484 538421 and ask to speak to Liz Wallis, Alison Mason or Adam Fletcher for your property enquiries. For Wills, please ask to speak to a member of the Wills & Probate team.