Seeing the word ‘tenants’, you’d be forgiven for thinking that this post has something to do with renting a property. Alas, you would be wrong. The difference between joint tenants and tenants in common, is actually all to do with the joint ownership of a property, and how that ownership is made up. Why does it matter? Let us explain…

Firstly, what is a joint tenancy?

A joint tenancy means that both purchasers of the property own it equally, and this is the option usually taken when buying property with a spouse, a family member, or someone else you have a really close relationship to. It’s a simple partnership, not a very complex process legally, and requires much less paperwork than more complex options.

Pros of a joint tenancy

  • It’s a simple process, and takes less time
  • Legal fees are likely to be less, as it’s fairly straightforward
  • Less paperwork required
  • It allows the right to survivorship – this means that if one tenant were to die, their share of the property would automatically pass to the other. This right is unique to joint tenancies.

Cons of a joint tenancy

  • It doesn’t allow for more complex situations where there may be unequal financial contributions (As each tenant would own the same percentage regardless of how much they contribute)
  • Agreement from both owners is required in order to sell the property, and should one owner not agree then there is a legal process to gain a court order.

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What is a tenancy in common?

When buying a property as tenants in common, it allows for the tenants to own unequal shares in the property. Usually, but not in all cases, this is the best option if you are purchasing a property with someone you are not close with or you’re purchasing it as an investment.

With tenancies in common, a deed or declaration of trust is required in order to lay out the specifics of the property ownership, and these often come into their own in the event of a breakdown in the relationship between tenants.

Pros of a tenancy in common

  • Tenants in common don’t need to own an equal share of a property. This allows for unequal financial contributions, for example if one person is fronting the entire deposit, or is paying a larger percentage of the mortgage. Upon the sale of the property, proceeds are divided up using the percentage of shares in the property, rather than being divided equally.
  • Having a smaller share of property ownership doesn’t mean that your rights to the property are reduced, far from it. If you were to own fifteen percent of a property and the other person were to own eighty five percent, but if you reside at the property then you still have a right to access the whole thing.

Cons of tenancies in common

  • The signatures of both tenants in common are required on the transfer deed in order to sell, although the wording of a document called a Deed of Trust can make it easier for a sale to be forced, should the situation arise where it was needed.
  • Each tenant is able to sell their shares to anyone, it doesn’t have to be to the other tenant.
  • In the event of the death of one of the tenants, their share belongs to their estate and doesn’t automatically pass to the other tenant in common. If a tenant wishes their share to transfer to a specific person, they would need to specify their wishes in the form of a will.

So there we go, the difference between joint tenants and tenants in common.

Although we’ve listed the pros and cons of joint tenants and tenants in common, the reality is that depending on the situation a pro for one couple could be a con to another – this makes it all the more important to seek good, solid legal advice before purchasing a property with either of these arrangements in order to help you decide which option is best in both the short and long terms.

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