When you buy a property jointly with someone else, you will either own it as joint tenants or as tenants in common.
When joint tenants hold a property together, both parties co-own the whole of the property. On sale, each is entitled to half of the proceeds and should one owner die, the other automatically owns the whole of the property, meaning it does not pass under the terms of any Will.
Ownership as tenants in common offers more flexibility and is often used where one party has contributed more to the purchase of the property than the other.
Owning as tenants in common
When people buy a property as tenants in common, they will specify what share each party owns and this is recorded along with their ownership. For example, if one person contributed 75 percent of the purchase price and the other contributed the remaining 25 percent, then they can own the property in those shares.
It is possible for a number of people to hold a property as tenants in common, with their percentage shares adding up to 100 percent.
If a tenant in common dies, their share of the property passes in accordance with the terms of their Will or, if they do not have a Will, under the rules of intestacy.
This means that someone can ensure that their share of a property is passed on to their children, for example, if they have remarried. It is important in this case to leave a Will, as the rules of intestacy favour a spouse.
Ownership as tenants in common is also a way of ensuring that part of a property is protected from care home fees, as the local authority can only take into account the portion actually owned by the patient.
A tenant in common can apply to the court for an order to sell a property.
Severing a joint tenancy
If a property is owned by joint tenants, it is a fairly simple process to change this to a tenancy in common.
One party needs to serve a Notice of Severance on the other party. This can be done at any time, for example, if there is a change in circumstances or you would like to put your share of your property into a trust. The other party does not need to consent to the severance of the joint tenancy.
If you wish to sever a joint tenancy, but still allow the other owner to live in the property after your death, you can include provision for this in your Will. By leaving them a life interest in the home, they can continue to live there for as long as they need to, but after their death, then your share will pass to your beneficiaries as specified in your Will.
If you would like to talk to one of our expert property lawyers, ring us on 0333 305 5189 or email us at info@lpropertylawyers.co.uk
