Joint tenants v tenants in common

Buying a home with someone else

Many people choose joint ownership when buying a property, especially couples, whether they are married or not. This type of ownership provides financial security that solo ownership might not. Legally, co-owners are referred to as 'joint tenants at law.' However, there are two main types of joint ownership to consider.

Joint tenancy

Joint tenancy is a form of joint ownership where two or more people (often couples) purchase a property together and hold equal shares. Each joint tenant owns the entire property rather than a specific portion of it. This means that all parties have equal rights to the whole property.

Tenancy in common

Tenancy in common is another form of joint ownership, but unlike joint tenancy, tenants in common own specific shares of the property. These shares are defined in a legal agreement and can vary in size. For instance, one tenant might own 25% of the property while another owns 75%. The proceeds from any sale of the property are distributed according to these shares.

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Difference between joint tenants and tenants in common

The fundamental difference between joint tenants and tenants in common lies in ownership and what happens when an owner dies. Joint tenants share equal ownership of the entire property. If one joint tenant dies, their share automatically transfers to the surviving joint tenant(s) and cannot be bequeathed to others.

In contrast, tenants in common own specific shares of the property, which can be passed on to beneficiaries in their will. This allows for greater flexibility in estate planning.

Joint mortgages

When multiple parties want to buy a property together, they often use a joint mortgage. This approach divides the financial responsibility and establishes joint ownership, either as joint tenants or tenants in common.

The pros and cons of joint mortgages

One significant advantage of a joint mortgage is increased borrowing potential, as lenders consider the combined income of all applicants. This can help first-time buyers enter the property market.

However, a joint mortgage also means shared financial responsibility. If one party has a poor credit history or fails to keep up with repayments, it can affect the other owners' credit ratings and risk property repossession.

Your rights and joint ownership

Joint ownership gives both joint tenants and tenants in common specific rights over the property. All co-owners have the same right to live in the property, and any major decisions about the property must be agreed upon by everyone involved. No single owner can sell or mortgage the property without the consent of the others.

Ending joint ownership

Either party in a joint tenancy or tenancy in common can end the joint ownership by providing written notice to the other owners. The Land Registry must be informed to place a restriction on the property, preventing any sale or mortgage without the involvement of all owners.

Frequently asked questions

How do I change a joint tenancy to a tenancy in common?

Transitioning from joint tenancy to tenancy in common is a common step taken when relationships change or when there's a need for clearer ownership arrangements. All co-owners must agree for this change to take place. Once agreed upon, the next step involves submitting a Form A restriction to the Land Registry.

How do I change a tenancy in common to a joint tenancy?

If you're considering changing from tenancy in common to joint tenancy, it's crucial that all co-owners are on board with the decision. To make this change, you'll need to adjust the terms of your property agreement. Enlisting the help of a conveyancer can make this process smoother, ensuring that all required paperwork is properly handled and submitted.

What is a Deed of Trust?

A Deed of Trust is a legal document outlining each party's financial contribution to the property and detailing what happens to their investment in various scenarios, such as the sale of the property or a change in relationship status.

Which is better - joint tenants or tenants in common?

The choice between joint tenants and tenants in common really depends on personal circumstances. Tenancy in common might be better for those who want to leave their share to children or other beneficiaries, while joint tenancy can be simpler and more straightforward, especially for couples.

Which tenancy is best for married couples?

Many married couples prefer joint tenancy due to the automatic transfer of ownership upon death, which eliminates uncertainties. However, older couples or those with specific bequest plans might find tenancy in common more flexible.

While it's not pleasant to consider the possibility of parting ways when purchasing a home together, it's important to acknowledge that tenancies in common offer additional legal safeguards for couples. Having clear ownership shares can potentially simplify matters in case of a breakup. This clarity may make navigating through difficult situations, like divorce proceedings, a bit smoother for both parties involved.

Let us help you find your perfect property

While legal considerations are crucial, buying a property together is exciting!

Contact Darlows today to explore available properties in South Wales and let us help you achieve your home ownership dreams.