If you’re buying property with one or more people in the UK, there are two different ways this property can be held: as joint tenants or tenants in common. In this guide we’ll focus on what it means for property co-owners to be joint tenants.
Although both joint tenants and tenants in common allow co-ownership, they differ significantly in how the ownership is structured and what happens to the property in the case of death, separation or the sale of the property.
What does it mean to be joint tenants?
Key features of joint tenancy include:
Equal ownership
As joint tenants, you and your co-owner each own the whole property. Regardless of how much each person contributed to the purchase of the home, all joint tenants are treated as having an equal stake in the property.
Dividing sale proceeds
If the property is sold, you’re each entitled to half of the sale proceeds, regardless of your individual contributions to the purchase price or mortgage repayments.
Right of survivorship
If one joint tenant passes away, their share of the property is automatically transferred to the surviving co-owner, bypassing the will or probate process. This makes it ideal for couples who want to leave the home to each other when they die.
Unified decision-making
All joint tenants must agree on any major decisions involving the property, such as selling or refinancing it.
Looking for information about tenants in common, find out more here.
Joint tenancy and divorce
When couples divorce, property held as joint tenants can bring challenges when settling divorce finances.
Whilst joint tenancy ensures equal rights during the relationship, it doesn’t account for unequal contributions or changes in personal circumstances, when the relationship ends.
Severing the joint tenancy
If your circumstances change, you can switch your property ownership type from joint tenancy to tenancy in common.
This process, called severance, converts the property ownership into a tenancy in common which allows each co-owner to hold a specific share of the property.
Severance is straightforward and doesn’t require the other person’s consent.
You can usually do this by completing a ‘Form A Restriction’ and notifying the Land Registry.
Fair division by the court
The court considers a range of factors when deciding how to divide property in a divorce, such as:
- Financial and non-financial contributions (including child-rearing or homemaking).
- Future needs, especially if children are involved.
- The overall fairness of the divorce financial settlement.
Right of survivorship risks
Until the joint tenancy is severed, the right of survivorship remains in effect. This means that if one co-owner dies during divorce proceedings, their share automatically transfers to the surviving co-owner.
Severing the joint tenancy is an essential step to in ensuring that the property transfers in line with your wishes. Because of this, it’s important to review your will following separation or a divorce to ensure that it reflects your intentions.
To buyout your ex or to sell
If you separate and own a property as joint tenants, you’ll need to decide whether to buy out your co-owner or sell the property.
Since joint tenants share ownership equally, buying them out usually means paying for their half at market value. If that’s not an option, selling and splitting the proceeds could be the best way forward.
Your divorce lawyer can help you figure out the right approach.
Benefits of joint tenancy
Choosing joint tenancy has some advantages for co-owners:
- It can simplify property ownership by treating all co-owners as having an equal interest in the property.
- It’s a unified approach to property ownership, offering shared control.
- There is no need to calculate contributions or specify individual shares in the home.
- The right of survivorship ensures that the property passes seamlessly to the surviving co-owner, avoiding delays or legal fees associated with probate.
Potential drawbacks of joint tenancy
Although joint tenancy has its advantages, it’s not without potential drawbacks. The equal ownership structure may not suit everyone. Drawbacks include:
- Joint tenancy doesn’t reflect unequal financial contributions, which can lead to disputes.
- The right of survivorship overrides a will.
- If you have children from a previous relationship, they will not inherit a share of the property.
- As all co-owners must agree to the sale or refinance of the property, disagreements can cause disputes.
The importance of legal advice for joint tenants
“Whilst it may not be the most romantic discussion when you’re buying a home together, it is important that homebuyers know their options and consider how the property will be legally held.” says Family Lawyer, Joanna Newton.
“Legal guidance when buying a property with one or more others can help future-proof against any unintended and expensive consequences. It can also help ensure different contributions to the purchase price or running costs of the property are protected, including contributions from parents or grandparents.”
Joanna adds “Seeking legal advice can also help to safeguard plans in the event of death, so that your share of the property passes on as you wish. Having the right legal structure in place will also provide crucial protection in the event of a separation or divorce, helping to ensure each party’s financial contributions are fairly reflected in any settlement.”
FAQs
Can joint tenants own unequal shares?
No. By definition, joint tenants must own the property equally. If unequal shares are needed, co-owners can choose to be tenants in common instead. However, whilst joint tenants legally hold the property in equal shares, a Deed of Trust can be prepared to record individual financial contributions. For example, if one party contributes more towards the purchase, the Deed of Trust can reflect this arrangement, even though legal ownership remains equal.
Can one joint tenant sell their share?
No, a joint tenant cannot sell their share without the agreement of all co-owners. Joint tenancy treats all co-owners as a single legal entity.
What happens if one joint tenant dies?
The deceased’s share automatically passes to the surviving co-owner(s) due to the right of survivorship, overriding any provisions in a will.
How is property divided in a divorce for joint tenants?
The court considers factors such as financial contributions, needs, and fairness to determine division. Severing the joint tenancy may be required to reflect your individual shares.
Can joint tenancy be reversed to tenancy in common?
Yes, severing the joint tenancy converts ownership into a tenancy in common. This is a common step during divorce or for estate planning purposes.
Final thoughts on joint tenancy
Joint tenancy offers a simple and secure way to own property with someone else, especially for couples who value equal ownership and automatic inheritance.
However, it’s essential to understand the limitations of this arrangement, particularly when it comes to unequal contributions or estate planning.
If you’re considering joint tenancy or facing a change in circumstances, speaking to a legal professional can help ensure the best outcome for your situation.
