There are basically two ways of owning a property in joint names, as either:
- Joint Tenants
- Tenants in Common
Joint Tenants: The main consequences of a joint tenancy are:
- that the survivor of two owners will automatically become the sole owner of the whole property, whatever any Will of the deceased owner might say
- that the ownership shares are not declared, with the presumption being that it was intended that the value of the property be shared equally
Tenants in Common: This alternative way of owning the property is more common in unmarried relationships and in second marriages or civil partnerships than in first marriages or civil partnerships. The main consequences of this are:
- that each owner can leave his or her share in the property by Will to somebody other than the other joint owner
- that the parties can declare the shares in which they own the property (e.g. 75% to A, 25% to B). This may be particularly useful where there is unequal contribution to the cost of purchasing the property. The absence of a precise declaration as to the shares of ownership may increase the risk of expensive litigation if the parties are unable to agree how the equity in the property should be shared, and could result in an outcome which might not have been the outcome the parties would have expected or intended at the outset
Changing Mode of Ownership: In a joint tenancy, either party can, without the other’s co-operation, convert the joint tenancy into a tenancy in common. This is known as severing the joint tenancy. The other party has to be informed of what is happening, but his or her permission is not required. The severance of the joint tenancy is then noted on the Title Deeds or at the Land Registry. It would be important to combine the severing of a joint tenancy with the making of a Will, so as to ensure that the share of the property went to the person to whom the party intended it to go, particularly if the proposed beneficiary is not the next of kin, as, if no Will is made, then the law of intestacy will decide what happens to the deceased’s estate and could decide that the beneficiary should be somebody who would not have been the chosen beneficiary of the deceased had he or she made a Will.
In a divorce or dissolution of a civil partnership (a same sex relationship registered under the Civil Partnerships Act 2004), the court is not bound by the declared ownership arrangements and within an overall settlement the court can make a variety of orders, (e.g. immediate sale, transfer from one owner to the other, adjustment of the ownership shares, deferred sale, etc.). For more information on this see our Financial Orders page.
Determining Shares in Property: In the event of a dispute arising over the shares in the value of a property, where the relationship is not a marriage or a civil partnership the court will not have the wide-ranging discretion that it has when dealing with a divorce or the ending of a same-sex relationship that has been registered in accordance with the provisions of the Civil Partnerships Act 2004.
Essentially, in cases involving the termination of a marriage or a civil partnership, the court can look to the future as well as to the past, with the objective of doing what is fair having regard to all of the circumstances of the case.
Where the relationship that ends is not a marriage or a civil partnership, the court’s role is usually more restricted. If the parties have specifically declared their financial interests in the property, then the court is unlikely to interfere with this.
If the parties have not declared their financial interests in the property, then the court’s role, unlike within the termination of a marriage or a civil partnership, is limited to looking back in time to work out what the parties are taken to have intended, and that will determine the outcome.
It is possible for the court to find that the parties have changed their common intention any time after completion of the acquisition of the property. A change of intention may be found:
- by reference to specific declarations by the parties of a revised agreement
- by the court inferring a change of intention as to shares from the statements or the actions of the parties, even if there is no formal declaration of such change
- by the court imputing an intention to the parties where the statements and/or actions of the parties do not provide sufficient evidence for a court to infer what their intentions were. This last example is in effect the court deciding for the parties what the court finds to be a fair outcome, having regard to the circumstances of the case
Mortgage: Please note that whatever form of co-ownership is chosen, you will each be liable to the mortgage lender for the full amount outstanding under the mortgage.
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