When two or more people own a property together it is very important that they understand the different types of joint ownership available.

Although we naturally hope that people will never “fall out” nevertheless unfortunately this does sometimes happen, with resulting disputes as to who is entitled to what from the proceeds of sale of the property.

It is very important to remember that when the property is sold, all mortgages and charges have to be repaid in full, as will the Estate Agents and Solicitors fees on the sale. Only the balance will be available for division between you.

Types of Joint Ownership

Joint Ownership Tenants

(1) What if a Joint Owner Dies?

Following the death of the first owner the deceased’s share automatically passes to the surviving joint owner(s). Joint tenants cannot leave their share of the property to somebody else in their will and neither can they give it to somebody else in their lifetime.

(2) What if the Joint Owners Separate?

If the joint owners cannot agree on how the proceeds of sale are divided, the courts will decide who should have what. The courts are likely to order the joint owners to share the proceeds of sale equally, regardless of how much they contributed. This is particularly likely when the joint owners are married or in a civil partnership.

Suitability:

The automatic right of survivorship makes this method of joint ¬ownership suitable and attractive to prospective joint owners who are married or in a civil partnership. However, a joint tenancy may not be suitable to a married couple or civil partnership where one or both buyers are individually wealthy and there are tax problems to overcome – or where one or both of them have children by a previous relationship and want to protect their inheritance rather than leave everything to the surviving spouse/civil partner.

Warnings!

You may agree that a Joint Tenancy is appropriate, on the basis that when the first person dies everything will pass to the survivor. Please note that this will not happen if the first to die becomes bankrupt because this has the effect of “severing” the Joint Tenancy and converting it into a Tenancy in Common. The bankrupt’s share (the extent of which will have to be ascertained) will then pass to their trustee in bankruptcy and the survivor will lose out.

Likewise, one person can sever the Joint Tenancy by simply sending a notice to the other owner. This changes the Joint Tenancy into a Tenancy in Common. They can then leave their share (probably one half and possibly more than they had contributed) to a third party, a situation that might not have been envisaged when the property was bought.

Tenancy in Common

(1) What if a Joint Owner Dies?

Each joint owner is given a specific share of the property, which may be equal or unequal. The share allocated to each joint owner usually reflects the amount of capital each party provided towards the property ownership. Each owner is free to dispose of their interest in that property either during their lifetime or in their will. It is of course important to remember this when making your will – the other owner may not be pleased if you have left your estate and, therefore, your share of the house to a third party! Who you leave the property to may be able to force a sale of the house without the consent of the other owner.

(2) What if the Joint Owners Separate?

If the parties were married or in a civil partnership and separated, then the situation is likely to be the same as if they were joint tenants. If, however, they were not married or in a civil partnership, then the Judge can normally only give to each party the share to which the deeds say they are entitled to. A tenancy in common is therefore the preferred option if you are not married or in a civil partnership and you.

(a) provided an unequal contribution towards the purchase, or
(b) do not want your share to go to the survivor.

Suitability:

Prospective joint owners who are not married or in a civil partnership to each other will usually be advised to hold by this method. Consideration should be given to this method where the contributions made by each of the joint owners are in unequal proportions or if you want to give your share to someone other than the surviving joint owner.

How can we help?

We will explain the legal process and documentation, ensuring that you fully understand the Joint Ownership options. By working with us, you can have peace of mind that your legal requirements are met, and your rights are protected.