By Karabo McLean-Salmon, Chartered Legal Executive, Residential Property, Penman Sedgwick LLP
When purchasing a property with one or more other individuals, you will need to consider which type of ownership best suits your needs: Tenants in Common (TICs) or Joint Tenants (JTs). So, what is the difference between the two, and how do they affect you?
Note: The term ‘tenant’ in the context of property ownership has a very different meaning to the type of tenant who rents from a landlord.
JTs will together own the whole of the property, rather than distinct shares. Therefore, if one owner dies, their interest will automatically pass to the remaining co-owner(s) – this is known as ‘the right of survivorship’. This arrangement tends to be the preferred choice for married couples or those in civil partnership seeking to simplify the transfer of ownership when one of them dies.
If you intend to pass on your interest in the property to people other than, or as well as, the co-owner when you die (such as children from a previous relationship), then a JT will not be suitable.
TICs hold distinct shares in a property – whether equal or unequal. The respective shares can be passed on or sold during the owners’ lifetime or upon their death. When a TIC dies, their share in the property will pass in accordance with their Will, or under the rules of intestacy if they do not have a Will. This means that each co-owner can specify who will inherit their share in the property when they die. This flexibility usually appeals to investors, unmarried couples, those with children from a previous relationship, or those who have made unequal financial contributions to the purchase of the property which they want to be recognised if the property is sold or the owners separate.
How you hold your property should be something you keep under review throughout your ownership of the property. If you decide to buy the property as JTs but later change your mind, the JT can be ‘severed’ – turning it into a TIC.
If you need further advice about what form of ownership is appropriate for your specific circumstances, we can help. Email kmclean-salmon@penmansedgwick.com or call 01923 225 212