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Joint Ownership of Property
Important Notes to Clients Regarding Joint Ownership
The issue of joint ownership of properties matters more nowadays than ever before. It is therefore important to be fully aware of the ways in which your property may be jointly owned. The way in which you own your property can have different consequences during your lives and will make a difference if and when one of you dies. To use the legal wording, you may own your property as 'joint tenants' or as 'tenants in common'.
In both cases the word 'tenancy' has nothing to do with a tenancy or lease but is a technical term describing how you hold the property.
As 'joint tenants', you both fully own the whole of the property. Each owner does not own a half or a third share etc, but all owners own the whole of the property jointly.
The term 'tenancy in common' is used where two or more people own the property in specific shares eg. 50/50 or 25/25/50, etc. Usually the owners specifically state in the title deeds the shares they each own in the property but this is not always the case and the owners may find that they need to decide on the shares that they each own at a later date.
So what happens if one of us dies?
If you hold the property as 'joint tenants', whether or not you are married or have contracted a civil partnership, then the whole of the property simply belongs to the other owner(s) automatically, whether or not the deceased owner had made a Will.
If you hold the property as ‘tenants in common' and have made a Will, then your share in the property goes to the person(s) you have nominated in your Will. However, if you have not made a Will, your share in the property will pass to the person who is entitled to inherit it under the Law governing intestacy. Please note that this may happen whether or not you are a married couple or have contracted a civil partnership and whether or not you have children. It is therefore very important that you make a Will if you hold the property as tenants in common.
What happens if one person wishes to sell or there is a separation or divorce or the dissolution of a civil partnership?
In such a case each owner may wish to claim a share in the property. If you are joint tenants it will not of course be clear as to what share in the property you are entitled. Either the owners will need to agree in what shares they own the property or in case of disagreement the owners would have to take the matter to Court.
If you are tenants in common your shares will usually have been made clear in the title deeds but if not then a Court may have to decide how much each tenant in common owns if the owners cannot agree between themselves.
If one of the owners does not wish to sell you may have to go to Court to try to force a sale of the property. This would be so whether you are joint tenants or tenants in common.
Are there any other implications?
Under present legislation, there can be important Capital Gains Tax and Inheritance Tax savings in owning a property in specific shares, i.e. as tenants in common, but usually in the case of Inheritance Tax it will be necessary to make a suitable Will to achieve these savings.
Further advice
If you wish to discuss anything in more detail, please contact us, we would of course be happy to advise you further.
