Tenants in Common vs Joint Tenants

In terms of estate planning … when you buy a property with another person or people, you'll either buy as 'tenants in common' or 'joint tenants'. As joint tenants, each person owns the whole of the property - or put another way, each person has a 100% stake in the property's value.

In the eyes of the law, you must act as a single owner.

That means you'll need to get one joint mortgage to cover the value of the whole property. If one of you dies, your part of the property automatically passes to the other owners. You can't leave part of the property to someone else in a will. You must all agree if you want to sell the property. Married couples that own property together would typically be joint tenants.

As tenants in common, you can all own a separate share of the property, and these shares don’t have to be equally sized - so for example, you may own 50% of a property, while each of your two children owns 25%. Each owner can also leave their share of the property to whoever they choose in a will when they die.

In theory, each owner can mortgage their part of the property separately. But, few - if any - mortgage lenders would be willing to agree to this so you will still normally need to take out a joint mortgage. As with joint tenancy, you must all agree if you want to sell the property. This type of joint ownership is typically used by friends or relatives who are buying together.

You can change from being either:

There’s no fee to do this. You can also change from sole ownership to tenants in common or joint tenants, for example, if you want to add your partner as joint owner. This is called transferring ownership.

Take proper legal advice on the options available before changing to tenants in common.  Make sure you understand exactly all the implications before changing the way in which you own your property.

Courtesy of WHICH, a simple table to explain what I’ve now picked up from talking to the financial types around me.

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