Property Department Information Sheet
Tenancy
This information sheet sets out the different methods by which a property can be owned. The information that follows explains the options available to you and will help you to decide which method of ownership best suits your requirements.
The options are as follows:
If you own the property as joint tenants, this means that you both own the property absolutely. There are no divided shares, and if either of you were to die, then the property would automatically pass to the survivor. For this reason, most married couples own a property as joint tenants, as they would want the property to pass to the surviving spouse on death.
We would mention that if at this stage you take this option, it is possible for you to “sever” the joint tenancy at a later date and adopt a different method of ownership. You would of course need to discuss this with us at the appropriate time.
If two people own a property as tenants in common, then all the property does not automatically pass to the survivor on death, and the property is owned in separate shares. This method of owning a property is advisable in a number of situations.
For example, if two friends own a property, it may be inappropriate for the property to pass to the survivor on death. If they were to own the property as tenants in common, then on the death of the first person, that person’s share in the property would pass under their will or, if they had not made a will, under the rules which apply if someone dies “intestate” (without a will).
Their shares in the property would not necessarily be equal. For example, one party may have contributed more towards the deposit than the other, or they may be paying the mortgage in unequal shares. It is possible to stipulate that the property is held eg 50/50, 75/25 or in any other combination of shares.
An unmarried couple may want to follow this procedure. A married couple may also want to if, for some reason, they do not wish the property to pass to the survivor on death. This may be to avoid inheritance tax problems. For some people, it would be better for their share in the property to pass directly to their children to avoid the surviving spouse increasing the value of his or her assets so that inheritance tax would be payable when the surviving spouse dies. It may be that one or both spouses have children from a previous relationship who need to be provided for.
Most of the situations above envisage a property being owned in two names, but the same principles apply if the property is owned in more than two names. Anybody owning a property jointly should carefully consider the above before deciding whether to own the property as joint tenants or tenants in common. If you decide you want to own the property as tenants in common, you would be advised to have a trust deed drawn up by us which would stipulate the shares in which you would own the property and also set out a procedure for dealing with the situation which would arise if one person wanted to sell his or her share in the property.
Where a trust deed is necessary, our fees will be £100.00 plus VAT.
Please confirm your instructions by completing and returning the instruction sheet provided, stipulating the manner in which you wish to hold the property. If any of the points raised in this sheet need further clarification, then please do not hesitate to contact us.
Note: The above is intended as a general overview for your information. It is NOT intended to replace proper legal advice. Each case is different and advice cannot be given without a proper analysis of your own circumstances.
