Joint Tenants vs. Tenants in Common: Which Property Ownership Structure is Right for You?

When you co-own a property as joint tenants (JT), each co-owner owns an equal undivided share of the property. This means neither owner has a specific or identifiable share. They have the same right and interest in the property. If you sell the property, you are – usually – each entitled to half the sale proceeds regardless of how much you each contributed to the purchase price or to the mortgage repayments.

A Tenancy in Common (TIC) means the parties own distinct shares of a property and they may have an equal or different share of the total property.

What is the difference between JT or TIC?

If the property is owned by the parties as JT, when one co-owner predeceases the other, their interest in the property will pass automatically to the remaining owner under the ‘right of survivorship’ rule. This is also what happens when a trustee of a trust fund dies as the trust itself is not affected by the death and the surviving trustees will continue with the trust.

In the case of TIC, there is no ‘right of survivorship’; if one party dies, their interest in the property does not automatically go to the surviving co-owner; it will however, go to the beneficiaries of their Will or if there is no will the property will devolve according to the rules of intestacy; which is why it is imperative to have a valid Will, if the parties are holding the interest in the property as TIC.

How to determine which is most suitable for you?

Married couples or couples in civil partnership may wish to hold the property as JT.

However, if the parties have children from a previous relationship, they may wish to leave their interest in the property to their children – in which case, they may want to hold the property as TIC, but again, it is very important to have a Will so that their interest can be passed to their designated beneficiaries.

If the parties are unmarried / or not a civil partnership, TIC may be more suitable.
This is particularly relevant if the parties’ contribution to the purchase of the property is unequal e.g., with the financial help from ‘the bank of mum & dad’ – the parties should have an agreement set up (Declaration of Trust) to reflect their financial contribution to the property etc. and to the running costs.

What is a Declaration of Trust?

You can specify the shares in which you hold the property in the transfer deed at the time of your purchase.  However, if your shares are unequal or if you wish to document a more detailed agreement as to the way in which you own the property, or how sale proceeds should be split in the future, you should consider a formal declaration of trust to set out your intentions.

A declaration of trust is a legal agreement between the co-owners of a property setting out their shares in the property, such as 50/50 or 90/10, and how they share the income, liabilities, expenses of the property. They can also set out events that could trigger a sale or otherwise amend the standard procedure on a sale/transfer as to how the property will be divided.

How Pinney Talfourd can help

Whether you’re co-owning as joint tenants or tenants in common, understanding your options is crucial. Contact our Residential Property team today to ensure your ownership structure aligns with your intentions and protects your interests for the future.