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What is the difference between “Joint Tenants” and “'Tenants in Common”

Joint Tenants: The joint owners are regarded by the law as owning the whole of the property without any form of separate share or distinction between them. On the death of one of the Joint Tenants the whole of the property passes to the survivor or survivors.  Normally the sole survivor of two Joint Tenants can sell the property and only needs a death certificate to prove their title or ownership.  This is a very common and convenient form of ownership between husband and wife where the parties are content for the survivor to be the absolute owner.  Where property is owned as Joint Tenants transfer of ownership on death is automatic.  The ownership of the land held as Joint Tenants cannot be altered by a Will. A Will made by a Joint Tenant, which leaves the land to anyone other than another Joint Tenant would be ineffective.

Where co-owners are not married, or have made different contributions to the purchase price, the preferred form of joint ownership will usually be as Tenants-in-Common.

Tenants-in-Common:  This means that the co-owners are regarded in law as having separate and distinct shares.  Therefore they can sell, give away or mortgage their shares.   On the death of a co-owner their share passes under the terms of their Will, or if there is no Will the Laws of Intestacy, and is protected by the requirement that another trustee has to he appointed before the land or property can be sold.

Do we need a Declaration of Trust?

In a joint tenancy, whatever the proportions in which the parties have actually contributed to the purchase price, and/or to the maintenance of the property or mortgage, the legal presumption is that any proceeds of sale will be divided equally.  To put a house in joint names is to make a gift of any excess contribution to the other party.

Tenants in common each own a specified share of the property but this share is not shown on the title deeds of the property so how do you know how much each individual owns and under what terms.    To be crystal clear about the precise agreement between the owners on such matters as the proportions in which the property is owned, who can live in the house, who decides when the property is to be sold, and so forth these matters should be discussed agreed and then recorded in a formal document known as a Declaration of Trust.

The Declaration of Trust is then signed by all parties and recorded on the property register at the Land Registry.

Why should a married couple hold their property as Tenants-in-Common?

There are a number of reasons that a married couple might wish to own their property as Tenants-in-Common:

1. To protect their share of the property and ensure it passes to their children in the event that the surviving spouse remarries or if this is a second marriage.
2. To protect a share of the property in the event that one spouse enters residential care.
3. To reduce Inheritance Tax.

To find out more or to discuss your own situation please call Simon Shaffer on 020 8952 0242 or email him at simon.shaffer@moerans.com

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