Joint ownership just means two or more people share legal rights to a property. However, there are different ways to set up this arrangement. In this guide, we'll break down your options, explain key terms, and offer tips to avoid some common pitfalls.
What is joint tenancy?
Joint tenancy is a type of property ownership where two or more people share equal rights and responsibilities for the entire property. Unlike other ownership structures, there are no distinct shares divided between the owners - each person effectively owns the whole property jointly.
One of the defining features of joint tenancy is the right of survivorship. This means that if one joint tenant dies, their share of the property automatically transfers to the surviving joint tenant. It bypasses any provisions made in a will or the general rules of inheritance. This makes joint tenancy a popular choice for married couples and long-term partners who want to ensure that property ownership is easily transferred to each other.
Pros and cons
Pros ✅ | Cons ❌ |
|---|---|
Automatic inheritance under the right of survivorship | Inflexible division of ownership |
Simple structure with equal rights and responsibilities | The property cannot be left to someone else in a will |
Often suitable for couples or close family members |
What are tenants in common?
Tenants in common is an alternative form of joint property ownership. Unlike joint tenancy, this arrangement allows owners to hold separate, defined shares in the property. These shares can be equal, or they can reflect differing financial contributions. Each tenant in common has the right to sell or transfer their share independently of the other owners.
Tenants in common do not benefit from the right of survivorship. If one owner dies, their share of the property does not automatically pass to the other owners. Instead, it forms part of their estate and is distributed according to their will.
Pros ✅ | Cons ❌ |
|---|---|
Ownership shares can be divided unequally to reflect contributions | No automatic transfer of shares upon death |
Each owner can pass their share to beneficiaries of their choosing | Disagreements over the property can be more complicated to resolve |
Greater flexibility for investment or business arrangements |
Joint tenants vs tenants in common compared
Feature | Joint Tenants | Tenants in Common |
|---|---|---|
Ownership shares | Equal | Can be unequal |
Inheritance | Right of survivorship (share passes to co-owners) | No automatic right of survivorship |
Wills | Share cannot be left in a will | Share can be left to chosen beneficiaries |
Flexibility | Less flexible, equal division of ownership | More flexible, adaptable to different situations |
Common use | Couples and family members | Friends, business partners, or co-investors |
Can you change your ownership type?
Yes, you can switch between joint tenancy and tenants in common if your circumstances or preferences change.
Changing from joint tenancy to tenants in common
Switching from joint tenancy to tenants in common is a relatively straightforward legal process called 'severing a joint tenancy'. You do not need the consent of the other owners to make this change, although you must notify them. To complete the process, you must:
Fill out Form SEV: This form, provided by HM Land Registry, is used to declare your intention to sever the joint tenancy.
Serve a notice of severance: A formal notice must be delivered to the other co-owner(s) informing them of the change. This notice does not require their agreement, but it must be appropriately documented.
Send the form and evidence to HM Land Registry: Once the notice is served, the completed form should be submitted for registration to update the property records.
After severance, each person’s share in the property is distinct, and the right of survivorship no longer applies. This change is often made to reflect unequal contributions or to allow each owner to leave their share to chosen beneficiaries.
Changing from tenants in common to joint tenancy
Switching from tenants in common to joint tenancy is a less common process, but it can be done if all parties agree. Unlike severing a joint tenancy, converting to joint tenancy requires mutual consent between all property owners.
Here’s how the process works:
Reach a formal agreement: All co-owners must agree to convert their shares into a joint tenancy, relinquishing individual ownership percentages in favour of equal shared ownership.
Prepare a Declaration of Trust or a new agreement: It’s often advisable to document the change formally, even if it's not legally required.
Complete an application to HM Land Registry: The change must be registered using the appropriate forms, such as Form RX3 (to cancel a restriction that indicates a tenancy in common).
Sign and submit the form: All joint owners need to sign the application before submitting it to HM Land Registry.
Ending joint ownership
There are several ways to end joint ownership, depending on whether you are joint tenants or tenants in common. Typically, you may want to consult with a transfer of equity solicitor for legal support.
1. Selling the property
Selling the property is the most straightforward way to end joint ownership. The proceeds are divided according to the ownership structure - equally for joint tenants and proportionally for tenants in common. If there are disputes about selling, one party can apply to the court for an order for sale under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA).
2. Buying out another owner
One co-owner can buy out the other to take full ownership of the property. This requires a valuation of the property and an agreement on the terms of the buyout. The remaining owner must update the Land Registry to reflect their sole ownership.
3. Court orders to divide ownership
In cases where owners can't agree on how to end joint ownership, the matter may be taken to court. A judge can order a sale or division of proceeds if necessary.
4. Mutual agreement to sever joint tenancy
If you are joint tenants, converting to tenants in common through severance allows each party to hold individual shares, making future separation or sale easier.
Things to consider when buying property with someone
Buying property jointly requires careful planning and clear agreements to avoid disputes later. You might want to consider the following:
Contribution amounts: Decide if both parties will contribute equally or if one person is investing more.
Ownership structure: Choose between joint tenancy or tenants in common based on your relationship and financial goals.
Legal agreements: A deed of trust can outline ownership shares, responsibilities, and plans for future changes.
Exit strategies: Discuss what will happen if one person wants to sell or if circumstances change.
FAQs
How should you split ownership of a house?
The best way to split ownership depends on your financial contributions and long-term intentions. Tenants in common allows for unequal shares, while joint tenancy assumes equal ownership. Formalising your arrangement with a deed of trust helps avoid future disputes.
What happens to joint ownership properties when you die?
In joint tenancy, the deceased’s share automatically passes to the surviving owners. In tenants in common, the share is part of the deceased’s estate and can be passed on through a will.
What is a deed of trust?
A deed of trust is a legal document that specifies how property ownership is divided and managed. It can define ownership percentages, outline who is responsible for expenses, and set conditions for selling the property. It provides clarity and legal protection for co-owners.
Final thoughts
Joint ownership of property can be a practical way to share the cost of homeownership, but choosing the right structure is crucial. Understanding the differences between joint tenancy and tenants in common, as well as planning for future changes, ensures a smoother experience and protects everyone’s interests. When in doubt, speak to specialist property lawyers to make informed decisions and put clear agreements in place.