By YOLANDA REGUEIRA
I am often asked what the difference between ‘joint tenants’ and ‘tenants in common’ is. This is an important distinction, as the tenancy in which you purchase a property will have future implications, particularly in the event of one tenant’s passing.
In most cases, married couples, family members and couples who have been in a relationship for many years will purchase as joint tenants. However, tenants in common is often utilised where, for example; a couple is in a new relationship or bringing together blended families; tenants are not related or in a relationship; or where there are
WHAT IS THE DIFFERENCE BETWEEN JOINT TENANTS AND TENANTS IN COMMON?
“Joint tenants” means that the registered proprietors, of which there can be more than two, own the property jointly in equal shares. If either of the registered proprietors dies, then the property is automatically transferred to the surviving registered proprietor(s).
“Tenants in common” means that each registered proprietor owns a share in the property. These shares do not have to be equal and can be 50/50, 75/35 or any other combination, provided that the shares add up to 100%. On the death of a registered proprietor, the property does not automatically transfer to the surviving registered proprietors, but the deceased’s will determines to whom the deceased’s share in the property is to be transferred. Often the nomination of tenants in common is not for personal reasons, but for taxation purposes.
EXAMPLES OF PROPERTY OWNERSHIP SCENARIOS
Tom and Mary are married and own property as joint tenants. Mary passes away. Tom is able to transfer the property into his sole name by lodging a copy of Mary’s Death Certificate, together with a Notice of Death form, at Land Registry Services.
John and Margaret are in a new relationship and purchase a home together. As their relationship is reasonably new, they purchase as tenants in common in equal shares (50/50). Some years later John passes away. The property is not automatically transferred to Margaret; instead it is transferred in accordance with the terms of John’s will.
Bob and Sue are in a blended family and have been married for ten years. Both have children from previous relationships. By purchasing the property as tenants in common, should either Bob or Sue die, then his or her interest in the property can be dealt with as per their individual will.
WHICH OPTION IS THE RIGHT ONE FOR YOU?
It is important you consider which tenancy is right for you and what you want to achieve with your share of the property, should you pass away. You should speak to your legal representative and your accountant to get the correct advice.