Author: Marta Grzelak, Partner at McHale & Co Solicitors* (see website).
*McHale & Co Solicitors do not provide legal advice in regards to properties in Scotland
There are two types of property-share ownership in England:
a) Beneficial joint tenants (the whole property belongs to both owners as one)
b) Tenants in common (joint ownership as reflected in shares). Shares can be either:
- Equal (50/50)
- Unequal (with the split agreed by the parties individually)
‘Joint tenants’ means that the property belongs as a whole to all of its owners. If one of them dies, the Right of Survivorship applies – the power to acquire the whole property. This is why this method of ownership is especially recommended to married couples as well as persons in a long-term relationship and who in the event of death would like to empower their spouse or partner to own the whole property. If the parties would like to transfer their share in a will, for instance when they have children from a previous relationship, then ‘Tenancy in Common’ will be necessary.
In ‘joint tenancy’, the owners have the same rights to the property regardless of their respective contribution at the point of its purchase. Thus, if A and B buy a property using this method of ownership and A has contributed 90% of its price, while B paid only 10% of the said price, any subsequent division of assets will result in B’s being entitled to half of the property value. However, if the parties wish to determine shares in line with their respective contributions from the beginning, ‘Tenancy in Common’ will be required.
‘Tenancy in Common’ is suitable for business partners and in other cases where parties do not wish to be subjected to the Right of Survivorship, e.g. when they have not lived together for very long or have not been in a relationship for a long time, or they wish to protect their share, in the event of death, for the benefit of other people, or when they want to determine their share in the property according to their level of contribution at the point of its purchase.
The distinguishing feature of ‘Tenancy in Common’ is determining the distinct division of shares between the property owners. Such division will be reflected and contained within a transfer deed.
Every type of property ownership owing to its characteristic features has its own advantages and disadvantages. In different circumstances different forms of ownership will be optimal. Therefore, it is not surprising that most people facing the dilemma of choosing the right title to their property seek the advice of a solicitor. The complexities surrounding English property law are hard to grasp even after a perusal of specialist literature. A real understanding of the subject requires practical experience and on-going exposure to these problems.