What kind of joint ownership do I have?

The solicitor or conveyancer who handled your transaction can tell you if you're joint tenants or tenants in common. You can also contact HM Land Registry to see if they have the information. However, if your joint ownership is dictated by a deed of trust which was never registered at the Land Registry or if you've inherited the property through a will, then they won't have this information. You can get a copy of your title deed from the Government website. If you have a Form A Restriction on the deed, then you may be registered as TIC. However, the Land Registry will also apply a form A restriction if you didn't specify a choice when you became the proprietors, among a few other reasons. The restriction wording at the Land Registry is as follows: “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.” Unless they have a court order, this will prevent one of the owners from making a 'disposition' (i.e. sale, transfer, mortgage etc.) of the property without the other owner. If there is no Form A restriction on the register, then you are joint tenants. You can sever the joint tenancy with a deed of trust and determine your shares, but this won't be valid until the deed is registered at the Land Registry. When our clients switch to tenancy in common unequal shares, we include both the registration of the deed and the severance of joint tenancy in our fixed fee.

Does marriage override tenants in common?

Owning a property as TIC allows joint owners to protect their separate shares and intentions for the property, regardless of relationship status. In most cases, the marriage will not override the tenancy in common. However, in the UK, the family courts have the power to overrule this in certain situations of divorce or dissolution. If the property was the marital home and the TiC arrangement left one spouse significantly disadvantaged, they may alter the shares to meet their duty to divide the assets fairly; the parties must be left in a position of equal standing, and there must be no discrimination between the respective roles of breadwinner and homemaker which are regarded as equal.

Do you need probate if you are tenants in common?

Probate is often required for TIC. There are some exceptions where probate will not be required: Where there is a living trust - the trustee is in charge of the property, so it will not be a part of the deceased's estate and therefore probate will not apply. The owners convert to joint tenants before either of them dies - as joint tenants, the survivor will automatically inherit the deceased's share of the property Where the deceased party gift their share before passing on - this will avoid probate but will not avoid inheritance tax unless the parties are legal spouses or the gift is made at least seven years before the death of the gifter Where there is a life estate deed - this grants the live tenant (original owner of the property, as tenants in common) the right to pass on the ownership of a property to another person, the 'remainderman' on their death, without having to go through probate. It is an irrevocable transfer to the other tenant in common, which reserves the right of the live tenant to live in the property until their death.

Can I pass on my ownership of the property to anyone when I die?

Yes, your beneficial share of the property will pass to your estate, so it is important to draft a will to clearly state who will benefit from this when you die. You must draw up a legal agreement, or deed of trust, to protect each tenant's individual interests when they live in a property. They may, for example, want to control exactly who can move in if one TIC decides to sell their share or if a tenant passes away.

Do you pay inheritance tax if you are tenants in common?

If the deceased's estate is worth more than £325,000, then you have to pay inheritance tax (IHT) at 40%. The value of their equity in the property (as all or part of their estate) is their percentage share of the current market value minus the outstanding mortgage debt. For example, Party A and Party B owned a property together as TIC. When Party A dies, their entire estate is a 70% share of a property worth £750,000. Party B owns 30% and there is £200,000 remaining on the mortgage. The total equity they hold in the property is £750,000 - £200,000 = £550,000. Party A's share is 70% of £550,000, or £550,000 x 0.7 = £385,000. This means that inheritance tax is due on the full value of the equity bequeathed: 40% of £385,000, or £385,000 x 0.4 = £154,000. If the inheritor cannot pay the £154,000 IHT, they will have to sell their share and pay the tax from the proceeds.

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What does tenants in common mean?

by:

Andrew Boast

(Last Updated: 22/02/2024)

Created on:

19/10/2017

Read by:

69

11 min read

Key Takeaways

With tenancy in common, two to four owners can hold a property or piece of land at the Land Registry.
They can own equal or unequal percentages of the property.
They can bequeath their shares using a will upon their death (as beneficial joint tenants, the property would revert to the other owner(s).
Most joint owners of property have a tenancy in common Deed of Trust.
You can change from tenancy in common to joint tenancy. For example, when you get married.

When you buy a property together with someone in the UK, you can own it with:

tenancy in common (TIC); or
joint tenancy.

In this article

Tenants in Common vs Joint Tenants

When owning property together, joint tenants will have equal rights to the entire property, as opposed to TIC, who can choose to own equal or unequal shares. TIC will also have more freedom in transferring their share of the property to another party.

Understanding the difference between tenants in common vs joint tenants is key, as they will affect the property and what happens to it right up until a sale or death.

Tenants in Common Meaning

TIC is a legal arrangement where you co-own a property or parcel of land in separate beneficial shares. Up to 4 parties can hold either equal or unequal legal and beneficial shares as TIC.

Why would you do tenants in common?

Tenancy in common offers more protection against any possible breakdown in the relationship between owners, provided you have a properly drafted will and Deed of Trust.

Tenancy in Common Unequal Shares

TIC can choose to hold unequal shares in the property and can split their taxable income according to those shares. They also have the option to execute a floating Deed of Trust, which will automatically adjust their shares when either party spends more or less on the property. This is achieved through a fair formula.

For these reasons, TIC offer the best advantages to:

Tenants in common + transfer on death

With tenancy in common, you can bequeath your share to a named beneficiary in a will so that they can inherit it instead of the other owner. As long as you register as Land Registry TIC with the proper restriction applied, then you are protected against the other owner disposing of the property without your consent.

Unmarried couples
Friends/family buying together
Anyone who intends to invest varying amounts into the property and would like this to be reflected in their share of ownership
Married couples or civil partners who would like to leave their share, in their will, to another beneficiary rather than their spouse

On completion of the conveyancing, your solicitor will register your separate interests at the Land Registry so that this can be used when distributing any proceeds upon sale.

What are the disadvantages of being tenants in common?

There is a potential risk for your shares in the property to be affected during the ownership of the property. That is because you may be paying different shares in the mortgage repayments or funding development to the property.

We always recommend you draft a tenants in common agreement before purchasing so you can clearly state your intentions and cover any eventualities. This type of legal agreement is called a Deed of Trust.

If you're married or civil partners owning unequal shares and you'd like to be taxed on your income from the property (by rent, lease or sale) accordingly, you'll need to submit a HMRC Form 17 Income Tax Declaration, otherwise HMRC will tax you as if you share the property 50/50.

Do you need a TIC legal agreement?

Protecting your interests when buying with tenancy in common is important, which is why we offer a variety of deeds of trust to suit whatever relationship you have with your joint owner. A basic Deed of Trust will protect your deposit, fixed shares, and your intentions for the property, including the procedure for sale.

Get a Deed of Trust

1-2 working days* | £299 INC VAT

If you want your shares to adjust according to your ongoing contributions, consider a Floating Deed of Trust instead.

Tenants in common rights and liabilities

Co-owners have legal rights and protections regarding their share of the property. They each have the right to possession of the whole property as long as it doesn't affect the other owner's rights, the right to be involved in decisions regarding the building's management, and the right to enforce their ownership and rights through legal channels if necessary.

Tenants in common right to occupy

You might think that because TIC own unequal shares, you divvy up the rooms. Despite owning separate and often unequal shares, the tenants still have the right to occupy the whole property.

Some rights and liabilities differ slightly from joint tenancy in several ways:

Tenancy in common mortgage loans

Even if you own unequal shares, all tenants are equally liable for taxes and most lenders will only grant you a joint mortgage, making you equally liable for the debt. A Deed of Trust can set out how you will each contribute to both, but if the other owners fail to pay their share, you will be jointly liable to the lender and the tax man. With an appropriate floating Deed of Trust, if you are forced to cover their shares of these bills, then your share of the equity will be adjusted to reflect this. Read more - What happens to a joint mortgage when you separate?

Does a mortgage have to be in joint names?

You can technically get a separate mortgage on your share alone if you are able to find a lender who will grant one. The Form A restriction, which you should have applied at the Land Registry, will prevent another owner from registering a mortgage or second charges on the whole property without your consent (or a court order).

Tenants in common selling house

You can mutually agree to sell the property, in which case all benefits and costs are divided according to the size of each TIC's individual share of the property. Most importantly, you each have the right to apply to force a sale.

You can also freely and independently sell your own individual share in a property or mortgage it (less common among lenders) or leave it in a will to any person you choose.

Any tenant could, for example, move out of a house, having sold their share and rights to the property to any third party.

As relationships can break down between owners, it is important to ensure you have pre-agreed what happens when tenants in common one wants to sell their share in the property. For example, by giving the other tenant(s) in common the right of first refusal.

This is a clause that should form part of a written express trust ('Deed of Trust').

What happens with tenants in common when one dies?

There are no automatic survivorship rights. If you die without a will, then your beneficial interest in the property passes onto your estate, which will be distributed in accordance with intestate laws.

If you share a house with your partner and don't have a will making them the sole beneficiary of the property, then your share could pass by intestacy to your closest relative, who may force the sale of the property against your surviving partner's wishes. The same is true if you are married or civil partners and fail to execute a will naming your chosen beneficiary to inherit your share of the property; then your surviving spouse would inherit your share.

If your late partner's share passes on to a third party, they become the new owner of that share. You both have the right to occupy the whole property. The inheritor will now have the right to either live in the property, sell their share to you or to a third party, or they may be able to force the sale of the property.

Do you need to sever your tenancy?

If you own as joint tenants, you can become TIC with a severance of joint tenancy. Make sure you protect yourselves with a deed. Our specialist solicitors can handle both for you, including liaising with the Land Registry. Get in touch for a no-obligation quote.

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Written by: Andrew Boast

Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands-on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.

Reviewed by: Caragh Bailey

Caragh is an excellent writer and copy editor of books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey, property law and mortgage-related articles.

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