If you are buying, acquiring or holding property jointly with someone else it is important that everyone understands the basis of joint ownership from the beginning.
There are two sorts: Joint Tenants and Tenants-in-Common. ("Tenant" does not have its usual meaning of someone paying in rent in either case).
Joint Tenancy is the form of joint ownership where two or more people own the property together on the basis that:
Tenants-in-Common is the form of joint ownership where two or more people together own property and their shares in the property are specified, e.g. Y and Z may own property jointly as tenants-in-common in equal shares or unequal shares, for example, a three quarter share for Y and a quarter share for Z.
This form of ownership can therefore record differing shares to reflect contributions such as where one party has provided more of the purchase money than the other. The effect of owning property as Tenants-in-Common is as follows:
If two or more people own property as Joint Tenants it is possible to "sever the joint tenancy" and change it to a Tenancy-in-Common where the shares would automatically be equal shares unless agreed otherwise by both owners.
It is not necessary to have the agreement of the other owner(s) for this change in joint ownership to happen. A person may wish to do this if, say, he or she was in dispute with or separating from his/her joint owner(s) or for some other reason such as inheritance tax planning.
For inheritance tax planning reasons we would recommend that joint owners of property switch from owning their property as Joint Tenants to Tenants-in-Common.
Published: October 2011
For further advice on property matters, please contact a member of our residential property team.
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