From The Legal Beagle Team 12/10/2016

If you’ve had a look through our most recent blogs, like this helpful blog on how much you can borrow, you’re probably pumped to get your name on the title of a property. While property ownership is pretty awesome, it pays to think about how your name is recorded on the title in cases where you’re buying the property with someone else.

What if we told you that there are two main ways to own property with another person (or people), and that these two ways have really important differences which you need to consider BEFORE your name goes on the title? This blog post sets out the main differences between Tenants in Common and Joint Tenants, so that you can decide which fits you.

What’s a Joint Tenant?

Joint Tenants own a property together. Pretty simple so far…except they both own the whole property together, not just a share of the property.

Being a Joint Tenant means that you:

• Own the entire property with your co-owner, in ‘undivided shares’     
• Can’t leave your share of the property to anyone in your will, as it will pass straight to your co-owners

If Anne and Angus McDougall bought the property as joint tenants, they’d go on the title as ‘Anne McDougall and Angus McDougall’. Anne and Angus would own the property together in undivided shares.

It doesn’t matter whether Anne or Angus put more money into the property, they each own the whole of the property together. Most importantly -  if Anne or Angus die, the property automatically gets transferred to the other. This is the case regardless of what Anne or Angus put in their wills.  

While this might be exactly what you want as a husband and wife or committed couple, it’s probably the last thing you want if you’ve invested with a friend or colleague and would like your share to pass to your immediate family in the case of your death. On that cheery note, let’s look at the other way to own property.

What about Tenants in Common? 

Tenants in Common also own property with their co-owner(s). However, these guys own a defined share of the property. Put simply, how much of the property each person owns is spelt out on the title.

Tenants in common allows you to:

• Record a share which shows unequal contributions – if one person pays more towards the house than the other, they have a bigger share of the house
• Reflect an agreement made as to how the property should be owned – for instance if you’ve moved in to a house already owned by someone who’s already paid off some of the mortgage, or if you’ve entered into a Relationship Property Agreement with a partner
• Leave your share of the property in your will to whoever you want

Cast your mind back to Anne and Angus for a second. What if Anne and Angus have always had separate finances, own separate property and have a relationship property agreement in place keeping their assets separate? What if Anne and Angus aren’t husband and wife at all, but brother and sister, or second cousins twice removed? What if they don’t necessarily want their share of the property to pass to the other on their death? Then Tenants in Common is right for them!

Say Anne and Angus buy a house together. Angus wants to keep some cash aside to put into his business, and only wants to pay a third of the deposit and service a third of the mortgage. Anne agrees that this is sensible and takes on two thirds of the deposit and mortgage. Their lawyer registers their interest on the title as: ‘Anne McDougall as to a 2/3 share and Angus McDougall as to a 1/3 share’. Anne and Angus know who owns what, and also can leave their share of the property to whoever they want under their wills.

Why does it matter?

Joint Tenants enables you to own a property with others, and it will pass to your co-owners on your death. This is perfect for committed couples who share all of their finances, who would leave the property to their partner in their will anyway. For any other situation, Tenants in Common is could be the best way to go!

Disclaimer: The information on this page is general information only and must not be relied on as legal advice. Legal Beagle is not a law firm or a substitute for a law firm. We are unable to provide any kind of advice, explanation, opinion, or recommendation about possible legal rights, remedies, defences, options, selection of legal documents or strategies.