What’s the difference between joint tenants and tenants in common?
When you buy a property as a couple, you’ll be asked to decide whether you’re joint tenants or tenants in common. But what do they mean and which is the best option? Let’s find out more.
It’s an exciting time when you buy a property. It’s even more exciting when you purchase as a couple as you have someone to share it with. However, amongst the excitement, there are some serious matters you need to consider.
When you buy a property with somebody, you’ll be offered a choice about how you register your ownership with the Land Registry. Those options are:
Joint tenants
Tenants in common
These may sound pretty similar, but they aren’t. The choice you make could have significant consequences, especially if you separate. In this article, we’ll explain what these terms mean and how they affect you as a homeowner.
Joint tenants
When you choose the joint tenants option, both you and your partner own the whole of the property.
This is the simplest option and the one most couples choose. It fits in with the ‘what’s mine is yours and what’s yours is mine’ philosophy.
Tenants in common
The tenants in common option is slightly more complicated. In this situation, each tenant owns a proportion of the property rather than the whole thing. It could be a 50:50 share, but it’s also possible to draw up a contract with your partner specifying an unequal share, such as 60% for you and 40% for your partner.
Partners often do this if one has paid a larger proportion of the property’s purchase price than the other and they want to safeguard their investment.
What if you separate?
Your choice of being joint tenants or tenants in common comes into play if you separate or if one of you passes away.
If you’re joint tenants and one joint tenant dies while you own the property, ownership automatically transfers to the other joint tenant.
If you separate, things get a little complicated as you can’t legally split 100% ownership. The best course of action is to apply to switch ownership to tenants in common. Then, you can sell the property and split the proceeds 50:50. Alternatively, you could buy out your partner’s 50% share (or vice versa). If you can’t come to an agreement in this situation, you may need to go to court.
It’s a bit more complicated if you’re tenants in common. If one of you dies, the specified share of the property goes to whoever the deceased person bequeathed it to in their Will. If you separate, it works as in the example above, except you might be dealing with different shares of ownership rather than a simple 50:50.
If you’re married and getting divorced, things may be slightly different as your assets will be pooled together and divided as part of your financial settlement. In this situation, you’ll have to consider your children’s welfare (if you have any) and how much income you and your former partner have. This is when you need a good solicitor in your corner.
Find out more from Couchman Hanson
Deciding whether to be joint tenants or tenants in common is a conversation you should have upfront with your partner as you buy your property. However, you should remember that you can change your choice if your circumstances change. Your solicitor will be able to help you.
At Couchman Hanson, our solicitors genuinely care about getting the best outcome for you. We’re highly professional, with ‘city’ level talent and experience, but also friendly and welcoming. Everything we do fits with our values of integrity, honesty and authenticity.
Call 01428 774756 or visit couchmanhanson.co.uk