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Joint Tenancies and Tenancies in Common
When two or more persons buy a property together, that property will be held in one of two ways, either as 'joint tenants' or as 'tenants in common'.
In a Joint Tenancy, each owns all the property. When one joint tenant dies, his interest disappears immediately before his death. Since the survivor already owns all the property, nothing passes or is transferred under any will, and little more needs be done, other than to record the death. This is simple, and convenient, but is only appropriate, usually, within the context of a marriage. Joint tenancies can become inappropriate where the parties may need to plan to reduce Inheritance Tax liabilities
Parties in a stable relationship, but unmarried, also often choose this way of holding the property, but if this applies to you, you should only do this with care. In particular, where people come to a relationship with children by a first marriage, a joint tenancy can disinherit the children of the spouse who dies first. His or her interest will pass straight to the survivor, and the children will then be dependent upon gifts made by the surviving spouse (who may again remarry). This cannot be controlled by a will very easily - property held under a joint tenancy can not be disposed of by a will.
In a joint tenancy, whatever the proportions in which the parties have actually contributed to the purchase price, and/or to the maintenance of the property or mortgage, the only safe working assumption is that any proceeds of sale will be divided equally. To put a house in joint names is to make a gift of any excess contribution to the other party.
Tenants in common each own a specified share of the property. When one owner dies, his or her share falls into that person's estate and passes according to their will, or as on intestacy. This mode of tenancy can sometimes be used as part of estate planning (trying to pay as little tax as possible). This is much the better way to hold property in all circumstances where a joint tenancy is not immediately and obviously appropriate.
For tenants in common it is sensible and sometimes necessary, both to make wills, and also to be crystal clear about the precise agreement between the owners on such matters as the proportions in which the property is owned, who can live in the house, who decides when the property is to be sold, and so forth. We can advise you about the issues you should consider. The agreement is then best recorded in a formal trust deed. As an absolute, and inadequate, minimum, the details should be recorded in writing and signed by each of you.
In summary, our advice is that you should always choose a tenancy in common unless (as will often be the case) there is a positive reason to choose a joint tenancy.
Please note that for lawyers there is an additional issue. We distinguish between the titles at law and in equity (who can sign and who gets the money). The legal title is always held as a joint tenancy, but that does _not_ affect the matters described above.
Please do discuss with us any questions you may have before making your decision.
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