Latest Legal News - Joint Tenants v Tenants in Common (January 2010)

When two or more persons buy a property together, that property may be held in one of two ways, either as 'joint tenants' or as 'tenants in common'.

Where two people choose to own a property as joint tenants, there is a legal presumption that each person owns an equal share. Where one joint tenant dies, the deceased's share would automatically pass to the surviving owner. This is simple and convenient, but is usually only appropriate within the context of a marriage.

Parties in a relationship other than marriage also may choose this way of holding the property but care should be taken in this situation as problems may arise. For example, where people come to a new relationship with children by a previous relationship, a joint tenancy can disinherit the children of the spouse who dies first. His or her interest will pass straight to the surviving joint tenant. This cannot be controlled by a will as property held under a joint tenancy cannot be disposed of by a will.

In a joint tenancy, irrespective of the proportions in which the parties have actually contributed to the purchase price and/or to the maintenance of the property or mortgage payments, the assumption is that any proceeds of sale will be divided equally. To put a house in joint names is potentially to make a gift of any excess contribution to the other party.

Alternatively, a property can be held by the owners as tenants in common. In this case, the shares in the property can be equal or unequal. For instance, one owner may contribute towards 70% of the purchase price and the other 30%. A formal trust deed will then be used to record each person's shares in the property. If there is no such deed, the legal presumption is that each owns half of the property.

Where there is a tenancy in common, if one owner dies, then the deceased's share does not go automatically to the survivor but will pass under the terms of the deceased's will, or, if there is no will, under the intestacy rules. Similarly, if one of the owners becomes bankrupt, only the bankrupt's specific share of the property would be at risk and fall into the bankrupt's estate.

When an owner does not want their share in the property to pass automatically on death to the survivor, they should choose to hold the property as tenants in common. This may be relevant, for example, if one or both of the owners have been married before and want to leave their share in the property to children from a previous marriage. In this situation a tenancy in common would be more appropriate.

For tenants in common it is sensible for both parties to make wills, and also to be clear about the precise agreement between the owners on such matters as the proportions in which the property is owned, who can live in the house, who can decide when the property is to be sold and so forth.

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