Joint Tenancy or Tenants in Common: What’s the Difference?

Are you planning on buying property with someone else? One of the biggest decisions you will have to make is whether to hold the property as joint tenants or tenants in common. Both options have their advantages and disadvantages, and it’s crucial to understand the differences before making a decision.

In this advice article, we will provide an overview of joint tenancy and tenancy in common, including their respective pros and cons. We will also discuss how to convert from one type to another, key legal aspects of each, and how they can affect your mortgage. Lastly, we will examine what happens when one owner wants to sell in joint tenancy or tenancy in common, and whether you should have a cohabitation agreement.

An Overview of Joint Tenancy

Joint tenancy is a type of joint ownership where multiple owners have equal rights and shares in a property. One key feature of joint tenancy is the right of survivorship, which means that if one owner passes away, their share automatically goes to the remaining owners. This ensures that the property remains within the joint tenancy arrangement and does not become part of their estate.

Joint tenancy is established through title deeds, which specify the type of ownership. In joint tenancy, each owner holds an undivided interest in the entire property, rather than owning specific portions. The ownership is not divided into separate shares, making it easier for joint owners to sell or mortgage the property. Joint tenancy can be a beneficial arrangement, especially in situations where there is a close relationship between the owners.

The Advantages and Disadvantages of Joint Tenancy

Simplified property transfer upon death and shared financial responsibilities are some of the advantages of joint tenancy. In joint tenancy, when one owner passes away, their share automatically goes to the remaining owners, avoiding the need for probate and making the transfer process smoother. Additionally, joint tenants share the financial responsibilities of maintaining the property, such as mortgage payments and upkeep.

However, joint tenancy also has its disadvantages. Potential conflicts between co-owners can arise, especially if they have different ideas about how the property should be used or managed. Another disadvantage is the inability to designate separate shares of the property. In joint tenancy, the property is owned collectively, and each owner has an equal stake in the entire property. This lack of individual ownership can become problematic if one owner wants to sell their share or use it as collateral for a loan.

It’s important to carefully consider both the advantages and disadvantages of joint tenancy before entering into this type of joint ownership. Evaluating your specific circumstances and consulting with a conveyancing solicitor can help you make an informed decision.

Understanding Tenancy in Common

Tenancy in common is another type of joint ownership that differs from joint tenancy. In tenancy in common, the co-owners can have unequal shares of the property. Unlike joint tenancy, where each owner has an equal share, tenancy in common allows for specific parts or percentages of the property to be owned by each tenant.

This type of ownership is often seen in situations where family members or business partners want to maintain separate shares. Upon the death of a tenant in common, their share can be passed on to beneficiaries as stated in their Will or according to intestacy laws. It is important to note that tenants in common do not automatically acquire the shares of other co-owners. Instead, their ownership interests can be freely transferred or sold without the consent of the other co-owners.

The Pros and Cons of Tenancy in Common

Tenancy in common offers several advantages and disadvantages for property owners. One of the pros is the ability to designate specific shares of the property, allowing for unequal ownership arrangements. This type of joint ownership is particularly useful in situations where family members or business partners want to maintain separate shares.

Additionally, tenancy in common provides flexibility in ownership arrangements, allowing for the transfer of shares to beneficiaries upon the owner’s death.

However, there are also cons to consider. Potential disputes over the management and use of the property can arise among co-owners, requiring a legal agreement to resolve them. Furthermore, unlike joint tenancy, there is no automatic right of survivorship in tenancy in common. Each owner’s share is passable to their beneficiaries upon their death. These factors should be carefully considered when deciding which type of ownership is appropriate for a particular situation.

Joint Tenancy vs Tenancy in Common

Overall, the choice between joint tenancy and tenancy in common depends on the specific needs and circumstances of the co-owners. Joint tenancy offers equal rights and the right of survivorship, while tenancy in common allows for separate shares and inheritance rights. Understanding these key differences is crucial when deciding which type of joint ownership is most suitable for a particular situation.

Key Legal Aspects of Joint Tenancy

Joint tenancy, a type of joint ownership, requires a legal document such as title deeds to establish the joint ownership. In joint tenancy, joint tenants share financial contributions and responsibilities, including mortgage payments and property taxes. This type of joint ownership is registered with the HM Land Registry in England and Wales. It offers the right of survivorship, meaning that if one joint owner breaks, the entire property automatically passes to the surviving joint tenant(s).

Joint tenants have equal rights and shares in the property, and they own the whole of the property together. In the case of a joint tenant’s death, the property does not form part of their estate, but instead passes directly to the remaining joint tenant(s) without going through probate. This can simplify property transfer and ensure continuity.

How to Convert from Joint Tenancy to Tenancy in Common?

Converting from joint tenancy to tenancy in common involves a legal process with a Conveyancing Solicitor. This typically includes creating a declaration of trust or other legal documents to specify the new type of ownership and the shares of each owner.

Legal Aspects of Tenancy in Common

Tenancy in common, like joint tenancy, requires a legal agreement to establish co-ownership and the shares among the owners. The agreement, often in the form of a deed of trust, outlines the rights and responsibilities of each tenant in common. One key aspect of tenancy in common is that each tenant has the right to independently sell or transfer their share, though any restrictions mentioned in the agreement must be taken into account.

Similar to joint tenancy, tenancy in common is also registered with the HM Land Registry in England and Wales. This registration ensures that the ownership status of the property is legally recognized and recorded. It provides clarity and protection for the parties involved. Tenancy in common offers a flexible type of joint ownership, allowing for individual shares and potential benefits in cases of default or the sale of the property.

With tenancy in common, each owner has a distinct share in the property, which can be larger or smaller depending on the agreed-upon terms. This allows for a more nuanced division of ownership, accommodating situations where one party may have contributed more or wishes to have a larger stake in the property. The freedom to sell or transfer shares independently can also be advantageous in cases where a previous relationship ends or when a named beneficiary wants to become a trustee of a property.

How to Convert from Tenancy in Common to Joint Tenancy?

Converting from tenancy in common to joint tenancy requires the agreement and cooperation of all co-owners. The process may involve legal actions like creating a new deed or amending the existing one to change the type of ownership.

Deed of Trust in Joint Tenancy and Tenancy in Common

A deed of trust is a legally binding document that outlines the legal arrangement between joint owners in both joint tenancy and tenancy in common. In joint tenancy, the deed of trust establishes equal rights for all co-owners and includes a right of survivorship. On the other hand, in tenancy in common, the deed of trust clarifies that each co-owner has separate shares of the property with no right of survivorship. Overall, the deed of trust plays a vital role in defining ownership rights and specifying the type of joint ownership for co-owners.

Should Unmarried Couples Have a Cohabitation Agreement?

A cohabitation agreement can safeguard the rights and interests of joint owners by outlining how the property will be managed and addressing separation scenarios. This legal document helps prevent disputes, making it essential for unmarried couples. Seeking independent legal advice is advisable when creating a cohabitation agreement.

How Does Joint Tenancy and Tenancy in Common Affect Your Mortgage?

When it comes to joint tenancy and tenancy in common, their impact on your mortgage can vary. In joint tenancy, all owners have equal shares, which may make it easier to secure a mortgage. However, in tenancy in common, each owner is responsible for their own mortgage payments. Lenders may also require a declaration of trust for added protection.

What Happens When One Owner Wants to Sell in Joint Tenancy or Tenancy in Common?

When one owner wants to sell in joint tenancy or tenancy in common, the process differs. In joint tenancy, all owners must consent to the sale. In tenancy in common, one owner can sell their share without others’ consent. Legal agreements and ownership transfers may be required for selling a share. The sale proceeds are divided based on shares in tenancy in common, while joint tenancy allows surviving owners to inherit a deceased owner’s share.

Conclusion

In conclusion, understanding the difference between joint tenancy and tenancy in common is crucial when it comes to property ownership. Each option has its own advantages and disadvantages, and it’s important to consider your specific needs and circumstances before making a decision.

Joint tenancy offers the right of survivorship and ensures that the property passes directly to the surviving owners upon death, while tenancy in common allows for more flexibility and individual control over shares of the property. Whether you choose joint tenancy or tenancy in common, it’s recommended to consult with a legal professional to ensure that your interests are protected and to understand the implications it may have on your mortgage and future decisions regarding the property.

How Can a Solicitor Help?

A conveyancing solicitor can help by advising you on the type of property ownership that is correct for your circumstance. Our conveyancing team will deal with all the conveyancing paperwork on your behalf, we will assist with, the whole transaction from the start to the end including exchange of contracts and completion.

Once your matter has completed, our experienced staff will deal with the post completion formalities such as payment of stamp duty and registering the property at Land Registry for you. We will deal with any requisition which are questions the Land Registry can raise when the application for registration has been submitted to them. We will ensure we comply with all the formalities and revert to you with the final copy of the register which would have your name on the document as the proprietor(s) which is your proof of ownership of the property.

We appreciate that buying a property can be a daunting and stressful experience especially for First Time Buyers, but our experienced staff will ensure the process is as smooth and stress free for you as possible. You will provide you with regular updates throughout the whole process.

Once your matter has completed, we will offer you 10% for our Wills service, which means you will receive 10% off the fees for making a Will with us, if you contact us within 1 month of your property completion.    

If you have any questions, please do not hesitate to contact us on the details below,

You can email Howells to make an appointment at info@howells.law or call us:

Sheffield: 0114 249 66 66

Barnsley: 0122 680 51 90

Rotherham: 0170 936 40 00