Joint Tenants and Tenants in Common – An Explanation

JOINT TENANTS

Two or more persons may own land as joint tenants, which means that they own the property in equal shares. The shares are undivided, i.e. neither person owns a defined share, but rather they all own the whole equally.

The practical implications are:

1. Neither party may dispose of, or mortgage, their interest without the other;
2. All owners will be equally liable to any mortgagee for any mortgage;
3. In the event of the death of one of the parties, the rule of survivorship applies. This means that the property passes automatically to the survivor(s). The survivor(s) automatically becomes entitled to the whole property. This is irrespective of any testamentary disposition the deceased may have made. If there are three joint owners, on the death of one owner the two survivors become jointly entitled to the deceased’s share;
4. The shares of all owners are equal, even if their monetary contributions are unequal. If the monetary contributions are unequal, then the person making the greater contribution may be deemed to be making a “gift” (of the difference) to the other(s). There is no gift duty payable, however there is still an effective divestment of wealth by the giver to the other owner or owners;
5. The provisions of the Property (Relationship) Act 1976 would not be affected by a joint tenancy. The Property (Relationship) Act 1976 will take precedence over registered ownership; and
6. Except in the case of a formal business partnership, joint tenancy will be assumed if the contrary is not stated.

This form of ownership is common for married couples, civil partnership or de facto couples. However, there may be instances where you would not want this to happen. For example, if you have entered into a subsequent relationship and you have children from an earlier relationship. If the property is purchased as joint tenants the children from the earlier relationship will not be entitled to inherit their parent’s share in the property.

TENANTS IN COMMON

Tenants in common own a property jointly, but in defined shares. This does not mean that each owns a particular physical part of a property, but that each share is defined in relation to the other or others. The shareholding may be equal or unequal.

Business investors, siblings and remoter family members purchasing together, and couples with blended families, often own property as tenants in common.
The practical implications are:

1. Any of the tenants in common can dispose of, or mortgage, their share separately from the others;
2. All owners will be equally liable to any mortgagee for any mortgage, irrespective of their ownership share; and
3. A tenant in common can dispose of his or her share by Will as they see fit. The remaining tenant or tenants in common do not automatically inherit the share of the deceased tenant.

If you intend owning the property as tenants in common we recommend that you also consider whether it is appropriate to enter into a property sharing agreement or an agreement under Section 21 of the Property (Relationships) Act. If you decide to proceed with a property agreement we will provide you with an estimate of our fee in relation to the drafting of such an agreement.
If you have not already done so, you should also consider making Wills leaving your separate shares to a specific person nominated by you.