As a private client solicitor I often advise clients regarding estate planning and Wills. During our discussions I need to determine how they own their home to be able to properly advise them as to their options. What I find more often than not is that most of my clients do not know ‘how’ they own their property.
If property is owned jointly then under English law it is owned in one of two ways, as ‘joint tenants’ or as ‘tenants in common’. The type of ownership is important, especially when you are planning to leave your share of it to someone on your death.
Where property is owned as joint tenants the joint owners own 100% of the property together and upon the death of one of the owners their share passes automatically to the other joint tenant(s). So if a brother and sister own a property as joint tenants and the brother tells me he wants to leave his ‘share’ of the property to his child as a gift, he cannot do so under the current form of ownership as joint tenants, his share will automatically pass to his sister on his death.
Where property is owned as tenants in common then the parties own the property in distinct shares. The shares can be in any proportions and do not have to be equal. They usually reflect the purchase monies provided by each tenant. To pass on this type of property upon your death you must do so through your Will, as unlike with joint tenant ownership, it won’t automatically pass to the other tenant(s).
It’s also worth noting that should you own a property as a tenant in common and as an unmarried couple, and die without a Will (intestate), your next of kin will inherit your share of the property, not your surviving partner.
If you own a property with another person, when you bought the property you would have been asked by the solicitor that handled the conveyancing how you wanted to own the property – as joint tenants or as tenants in common.
If you don’t recall doing this how can you check? Most properties are registered with the Land Registry and you can request official copies of the register of your property (This is what we commonly refer to as our title deeds, which nowadays are not kept in a big brown envelopes with the bank or solicitor but held on a computer at the Land Registry.) You can request a copy of your title deeds at: www.gov.uk/get-information-about-property-and-land/copies-of-deeds
Once you receive a copy of your register title you would hope to see the words joint tenants or tenants in common. Not so. If you own the property as tenants in common the deeds will contain what is known as the ‘Restriction’, which states:
‘No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court’.
If the Restriction is in place then this tells any potential buyer that there is a tenancy in common and the purchase money must be paid to at least two people. This prevents a person who owned a property as a tenant in common, selling the property upon their partner’s death, and pocketing all the money.
If you own your property as joint tenants there is no Restriction on the title.
If you do not own your property in the way that you thought you can change the manner of ownership. You don’t have to wait until you buy or sell it, separate or divorce, or until you make a Will, but these are often the triggers.
If a joint tenant wishes to leave his or her share in the property under his Will to anyone other than the other joint tenant(s) then he or she can ‘sever’ the tenancy. This is easily done by serving a notice of severance on the other co-owner/s and registering the restriction at the Land Registry (if the property is registered). This converts the ownership into a tenancy in common and allows all the co owner(s) to dispose of their shares as they so wish upon death.
Conversely, tenants in common can change the form of ownership to joint tenants simply through a declaration as to the change of method of ownership and to withdraw the joint proprietorship restriction registered at HM Land Registry.
Traditionally, most married couples bought their property as joint tenants to make sure it passed automatically to the surviving partner when one of them died. With more and more people co-habiting and not marrying there seems to be a greater need to protect their ‘share’ of their property for the future. That may be protection from separation, divorce, bankruptcy, spend-thrift children or care home fees. Property ownership as tenants in common is therefore much more common.