Types of Property Ownership.

Tenants in Common or Joint Tenancy?

Buying a property with a partner, friend or family member can be exciting, but it is important to understand how the property will be owned. One of the key decisions is whether to own the property as joint tenants or tenants in common.

This decision can affect what happens if one owner dies, how sale proceeds are divided, whether shares can be left in a will and what happens if one person wants to sell or move out. It is worth taking legal advice before the purchase is completed, particularly where people are contributing different amounts of money.

Joint Tenants

Joint tenants own the property together as a whole. They do not own separate defined shares. If one joint tenant dies, their interest in the property usually passes automatically to the surviving joint owner or owners. This is known as the right of survivorship.

Joint tenancy is common for married couples and civil partners, but it is not always suitable. It may be unsuitable where owners contribute unequal deposits, want to protect separate shares, or want their share to pass under a will.

Tenants in Common

Tenants in common each own a defined share of the property. The shares can be equal or unequal, depending on what the owners agree. For example, two people may own 50% each, or one may own 70% and the other 30%.

If a tenant in common dies, their share does not automatically pass to the other tenant in common. Instead, it passes under their will or, if there is no will, under the intestacy rules. For this reason, anyone buying as tenants in common should also consider making or updating a will.

Declaration of Trust or Co-Ownership Agreement

When friends, unmarried partners, or family members buy together, a declaration of trust or co-ownership agreement can help avoid disputes. This can record each person's financial contribution, ownership share, mortgage responsibilities and what should happen if someone wants to sell.

The agreement can also cover practical issues such as payment of bills, repairs, insurance, improvements, lodgers, partners moving in, pets, use of rooms and how disagreements will be handled. Discussing these points before completion can prevent expensive disputes later.

Can One Owner Force a Sale?

Co-owners usually have the right to occupy the property, but problems can arise if one person wants to sell and the other does not. If agreement cannot be reached, one owner may need to apply to court for an order for sale.

A properly drafted agreement can set out what should happen if someone wants to leave, loses their job, stops paying the mortgage, starts a new relationship, dies or wants to sell their share.

Mortgages and Joint Ownership

If there is a mortgage, the lender will normally require that all legal owners be parties to the mortgage. This usually means each borrower is jointly and severally liable, so the lender can pursue any one of them for the full mortgage debt if payments are not made.

Not all lenders offer mortgages for larger groups of buyers. If more than two people are buying together, it may be sensible to speak to an independent mortgage adviser who can check which lenders may be available.

Changing From Joint Tenants to Tenants in Common

It is possible to change from joint tenants to tenants in common. This is known as severing the joint tenancy. HM Land Registry guidance says this can be done by applying to register a Form A restriction using Form SEV. If all owners agree, the process is usually more straightforward.

If the other owners do not agree, a joint owner may still sever the joint tenancy by serving written notice. Legal advice should be sought before doing this, particularly where there is a dispute, a mortgage, a relationship breakdown, or a wider financial issue.

Changing From Tenants in Common to Joint Tenants

Changing from tenants in common to joint tenants is also possible, but it may require agreement among the owners and the removal of any Form A restriction from the title. Mortgage lender consent may also be needed if the change affects the mortgage or legal ownership.

Because ownership changes can affect inheritance, tax, relationship rights and sale proceeds, it is sensible to get conveyancing and, where appropriate, private client advice before making the change.

Getting Independent Legal Advice

Each co-owner should consider taking independent legal advice, especially where contributions are unequal or where one person is relying on another financially. Independent advice helps ensure that each person understands their rights, responsibilities and risks before signing legal documents.

Find a Conveyancing Solicitor

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