Tenants in common is on eof the 2 forms of owning property jointly under English law, the other being joint tenancy. For a fairly straightforward legal issue, the implications of which of these 2 forms of co-ownership are selected are very big indeed, so when it comes to conveyancing on buying a new property with more than 1 buyer, the choice of joint tenants or tenants in common is something your conveyancing solicitors should discuss with you, particularly as, when opting for tenants in common rather than joint tenancy, it is advisable to have a trust deed in place also, to provide, for example, on what happens if 1 owner wants to sell and the other doesn’t, what the position is if 1 party has paid more towards the deposit for purchase or if it is known that 1 party is likely to pay more towards the mortgage. It is also important to have an indemnity in such deeds, such that if there is default in paying the mortgage or a negative equity situation and the lender chooses, for whatever reason to only pursue 1 of the owners and not the other or others, that the other party or parties must pay their share towards any ultimate liability.
So, the basic differences between a joint tenancy and tenancy in common are :-
1. Joint tenancy implies 50/50 ownership of equity
2. Critically, with a joint tenancy, there is legal principle known as the right of survivorship. This means that regardless of any will or if no will is made, the intestacy rules, where one party dies, that person’s share of the equity in the property will automatically pass to the surviving owner. This can go against wishes, for example, if a couple have split up, or can create tax inefficiencies where it is not advisable for spouses not to use their full tax free nil rate allowance.
3. With a tenancy in common, each party’s share in the property is separate so there is no right of survivorship and on death, the deceased’s share will go to whoever it is left to in a will or if no will, under the intestacy rules.
Whilst it is highly advisable, for the legal reasons described above, to have a trust deed with a tenancy in common, in terms of notifying the Land Registry of which of the 2 forms of co-ownership have been agreed on purchase, at it’s simplest form, this is merely ticking a box on the pro-forma transfer document.
The decision as to which of the 2 forms of co-ownership is a very important one. Be aware also that the type of co-ownership can be altered by the owners relatively easily even if, for example, a joint tenancy was chosen at the outset. When circumstances change or you make or review a will, it is important that you also consider this issue, and your wills solicitor should, certainly consider this issue with you. Failing to do so would almost certainly be negligence.