When you buy a property with another person, whether it is as your home or as an investment, there is more than one way you can own it. You can buy a property as ‘joint tenants’ or ‘tenants in common’ and it’s important to know the key differences between the two and the legal implications of each option.
If you buy a property as joint tenants, each person owns the whole of the property and no one person has a larger share than the other. This means that together, you are effectively a single owner, with one joint mortgage.
As joint tenants you have certain legal rights that can protect you should your situation change in the future. The main distinguishing feature is that if one co-owner were to die, the other would automatically inherit the entire property (along with the remainder of the mortgage) regardless of any instructions left in any will. This is known as the Right of Survivorship. Couples who are married or in civil partnerships often opt for this type of ownership.
Tenants in common
As tenants in common, each co-owner owns a specific share of the property. Generally, this will be shared evenly but it can be split unevenly.
As each co-owner holds a distinct share in the property, they are free to leave their share to whoever they wish in their will. Unlike a joint tenancy, when a co-owner dies without a will, their share of the property will then pass to their nearest living blood relative under the Rules of Intestacy.
This kind of tenancy suits situations where two or more friends are buying a house together. Mortgage lenders will usually take into account the top two incomes coming into the house as a basis for the joint mortgage. It is possible to get separate mortgages for each person, but many lenders tend to avoid this.
This kind of tenancy is also ideal for couples who have children from a previous relationship and want to leave their share of the property to their children in their will, rather than their partner.
Changing your property ownership type
There may come a time when your situation changes, for example, your relationship breaks down and one person wants to sell the property, but the other doesn’t. This situation can be stressful and if you can’t come to an agreement then the person who wants to sell will need to apply for a court order.
It is therefore advisable to draw up a legal agreement before entering into joint property ownership, that details when the property can be sold and how the money from the sale of the property is to be shared between the co-owners. An independent legal advisor can ensure you have covered all scenarios in this agreement and that each co-owner is treated fairly.
If for any reason you wish to change from joint tenants to tenants in common, you will need to apply for a Notice of Severance and send it to HM Land Registry, who will be notified of this change in ownership. A solicitor can apply for this on your behalf.
Get specialist advice on property ownership
When buying a property, it’s important to get all the legal details right. At Bird & Co we pride ourselves on providing an expert conveyancing service you can rely on. Call one of our highly experienced conveyancing solicitors today on 01476 372 044 or visit our contact page to find your nearest office.