It might be a surprise to learn that the phrase “tenants in common” has nothing to do with renting a property and everything to do with buying one. Usually this applies when you buy a property with someone and the parties are not married. In this article we will explain the legal definition of tenants in common.
When buying a property, the law tries to look to the future and will cover aspects such as the co-owners parting ways or the property being inherited. As part of this, there needs to be a clear definition of how much of the property is owned by each party. This is done by declaring whether the co-owners are joint tenants or tenants in common.
What Does Joint Tenants Mean?
This is perhaps the simplest version of the two and, in essence each party owns equal shares of the property and in the event of a split each party is entitled to 50%. If one partner passes away, then the other party automatically inherits all of the property and neither party can leave a share of the property to someone else in a will.
What Does Tenants In Common Mean?
On occasion, being joint tenants isn’t appropriate as one partner has contributed significantly more to the property either as part of the deposit or mortgage payments etc. As such it might be more appropriate for one party to have a larger share in the property than the other. For example, with the help of a solicitor, the partners might agree that one gets 40% and one 60% at the outset of the purchase. One additional benefit is that the percentage can be altered with agreement of both parties at any stage. So, should one partner start to earn significantly more and contribute more to the property it might be decided to change the 60:40 split to 70:30.
One of the biggest benefits of a tenancy in common is that the portion owned by either party can be left in a will to others. This is especially attractive to those on second marriages and who have children with previous partners. Being tenants in common will allow each partner to leave their portion of the property to their respective children.
Which One Is Right For You?
No matter which option you choose, the decision should be based on what is best for you and your circumstances. It is important to gain professional legal advice specific to your circumstances and it should also be noted that as life changes it is also possible to alter the tenancy basis by making the correct legal application using a solicitor.