What is the difference between Joint Tenants and Tenants in Common in Conveyancing?
Despite conversations and topics surrounding death or separation are considered uncomfortable under the best of circumstances, this is an important subject that all property owners and potential buyers should consider in great detail. The death of a proprietor or a difficult separation (owner of a property) can cause great difficulty in selling the property if appropriate estate planning has not been set in place. Please note that the examples given below are for illustration purposes only and therefore does not constitute being legal advice.
We will try to discuss the two common types of scenarios – where the beneficial interest is either held as Joint tenants or Tenants in Common. Though this is a broadly simplified explanation of a complicated topic, please contact us should you require any further clarification.
Two common ways of defining ownership of a property
More often than not, when there are two or more owners for a property (examples such as two partners or husband and wife) each proprietors’ ownership of the property is defined either as ‘Joint Tenants’ or ‘Tenants in Common’.
Joint Tenancies are easier to understand. Each proprietor (however many there are) will own the property equally. In other words, a property with two ‘Joint Owners’, will own 50% of the share; a property owned by three ‘Joint Owners’ would each own one third of the share etc. What this means (more applicable on the death of one or more Joint Owners) is that the share of the diseased will automatically be transferred to the surviving party. For example, a husband (or wife) on the death of one party would be able to sell/transfer the interest of the whole of the property/land in question simply by presenting a copy of the death certificate in order to satisfy the Land Registry.
Where this process gets more complicated is when the property is held on Trust. Under these circumstances, the simultaneous interest of the land or property in question, the legal estate is separated from the equitable estate. When two or more co-owners hold the property on Trust as Tenants in Common, the share of each co-owners interest will usually be defined under a separate Deed (Deed or Declaration of Trust). This type of arrangement is more common when one proprietor is contributing more equity towards a purchase, and or have Children or Beneficiaries from previous relationships etc.
Unlike Joint Tenants, land held as Tenants in Common will not have the share of the deceased party, automatically transferred to those surviving parties. It is therefore imperative that a Will is in place for all co-owners, clearly defining what their wishes are for their estate. Inevitably, this will also mean that the surviving party, unlike with Joint Tenants are unable to sell/transfer the deceased party’s interest prior to obtaining Probate.
Establishing what form of ownership is in place on any property is important both for the Seller(s) and Buyer(s) as these interests will need to be overreached on completion of the sale/purchase.
How does the buyer’s conveyancer know what beneficial interests might be affecting a property?
As more and more land and properties are now centrally registered at HMLR, your conveyancer can quickly establish if the property ‘Sellers’ hold the property on Trust as Tenants in Common. Within the ‘Title Deeds’ under Proprietorship Register, a Form A restriction warns a buyer that the Sellers interest over the land or property is held as Tenants in Common. If there is no Form A Restriction, the seller’s may be holding the property as joint Tenants. It is however possible for a Joint Tenancy to be changed to Tenants in Common. This is the case more commonly seen when one or more Joint Owner declares themselves bankrupt.
It is however more complicated to establish Beneficial Interest over land if the property is unregistered (though we are seeing less and less titles with such unregistered titles). In this case, the buyers Conveyancer will check the title deeds (or lease if the property is a Leasehold Property) for any endorsements relating to the beneficial interest in the property.
Please contact our Conveyancing Solicitors at Express Conveyancing to discuss your needs for a Declaration of Trust or Will and we will be happy to walk you through the labyrinth of possible pitfalls when it comes to potential estate planning issues.