There are two types of joint ownership of a property. Whether a property is freehold or leasehold you can own the property as either Joint Tenancy or Tenants in Common.
With this agreement the joint owners both own the whole property and do not have a particular share in it.
When one of the owners dies the other automatically becomes the sole owner, even if the deceased owner has made a Will leaving their ‘share’ to someone other than the co-owner.
Tenancy in Common
With this agreement the Tenants in Common each have a definite share in the property.
For example, A and B could own the property in equal shares, or A could own one quarter with B owning three quarters.
With this type of ownership, if one of the owners dies, his or her share of the property will pass on to whomever he or she specifies in a Will.
Therefore it is strongly recommended that the partners buying a property as Tenants in Common both make a Will. Without a Will their share of the property will be distributed according to the rules intestacy
Which type of joint ownership should you opt for?
It depends upon personal choice and particular circumstances.
Married couples tend to opt for Joint Tenancy, as there is no perceived advantage in having separate shares in the property. It is commonly accepted that when the first partner dies the property would automatically pass to the surviving spouse. However, this can lead to problems as the whole of the property will pass into the survivor’s estate and can be used to assess for care costs and could also be liable for Inheritance Tax upon their death.
Alternatively, Tenancy in Common tends to be used between unmarried couples, business partners, or family members like brothers and sisters, parents and children. In these relationships there may be some advantages in one partner having a specific share in the property and for each owner to be able to leave his or her share in the property to a named person other than the other owner. It also means that the whole property cannot be used to assess for care cost or Inheritance Tax.
If you are considering buying a property let us advise you.
At Peter Robinson & Co. our specialist team of Property Lawyers have the knowledge and expertise required to make the process as straight forward as possible.
Call us now on 0161 678 7996