Buying a home – joint tenants or tenants in common?
12 April 2016
In particular, if you are not married, or in a civil partnership, you need to think about what will happen to your respective shares of the investment if one of you dies or you later separate.
If you decide to be joint tenants you will own the whole of the property together, with a right of surviviorship. This means that if one of you dies, the surviving partner automatically becomes entitled to the whole of the property. It applies even if there is no will, or if the will does not refer to the surviving partner.
Tenants in common
If you decide to be tenants in common, you will each own a defined share of the property. This could be 50 per cent each, or whatever you decide. An unequal split may be appropriate if, for example, you have contributed different amounts to the purchase, or one of you is taking on more responsibility for the mortgage.
Your conveyancer can ensure the transfer deeds record the shares in which you both own the property. Alternatively, they may prepare a separate declaration of trust. Either would determine the split of any sale proceeds in the future, and head off a potential dispute.
When you die, your share of the property will be distributed according to the terms of your will. If you do not have a will, your share will be distributed according to the intestacy rules. It will not automatically pass to the other tenant in common, and they may be forced to sell their home.
Changing from joint tenants to tenants in common
If you start out as joint tenants and your circumstances change so that you no longer want to be joint tenants, you can serve a notice to sever the joint tenancy. This changes the joint tenancy to a tenancy in common. You might want to do this if your relationship breaks down or for inheritance or tax planning reasons. Your lawyer can prepare the appropriate notice for you.
Making the right arrangement for you
There are a different inheritance and tax planning implications for each option, of which you will need to be aware, especially if you have children from a previous relationship to consider. It is best to take independent legal advice before committing to anything and your lawyer will be able to advise you on your best options.
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The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice, and the law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.