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Are you buying a property with someone? You’re about to enter into joint ownership, but do you know what kind? We’ll help you figure out whether a tenancy in common would suit you.
To be tenants in common you must be part of a tenancy in common agreement. A tenancy in common agreement is a situation in which 2 or more people hold interest in a property and each owner has the right to leave their share of the property to a beneficiary upon their death.
This doesn’t mean you own separate parts, but that you have separate interest in the whole property.
Tenants in common can have different ownership interests, e.g. Jane may own 75% of a property and Jack may own 25%.
The fact that you own separate proportions of interest in a property makes tenancy in common suitable for people who want to purchase a property with friends and family.
Both tenancies in common and joint tenancies are types of joint ownership. They serve a similar purpose, which is to allow people to co-own property. However, the way they’re set up and the rules they follow are slightly different.
How do you and your co-owners decide between becoming joint tenants or tenants in common? It ultimately depends on your situation and who you want to co-own your property with. Carefully consider which option is best for you, or you risk causing problems later.
So, what are the main differences between joint tenants and tenants in common?
Joint tenants and tenants in common must follow some of the same rules, including:
Together, all co-owners within a tenancy in common agreement own 100% interest in a property. You don’t each own 100%, as in a joint tenancy, but your shares add up to 100%. The breakdown can be any variation, i.e. Dan could own 50%, Dave could own 25% and Ellie could own 25% or they could each own a third at 33.33%.
If no ownership interest breakdown is specified, it’s assumed that all owners have equal shares in the property.
You can change from sole owners to tenants in common via a process called transferring ownership.
You can also change from joint tenants to tenants in common.
To switch from a joint tenancy agreement to a tenancy in common, you undergo a “severance of tenancy’ and apply for a form A restriction that you send to HM Land Registry’s Citizen Centre.
You don’t need permission from the other owners to change from a joint tenancy to a tenancy in common.
If they don’t agree, you:
A solicitor, conveyancer or legal executive can handle the whole process for you. This will incur some cost, but there’s no fee regarding the actual change itself.
You may need to change from joint tenants to tenants in common if you divorce or separate from your partner and want to leave your share of the property to someone else.
The way tenancies in common work isn’t for everyone. There are some risks which you should consider before making your choice.
The risks associated with tenancies in common are:
Tenancies in common allow you to be a joint owner with a little extra independence. Do you want to know more about your mortgage options? Then make an enquiry or call us on 0344 346 3672 and speak to one of our specialist mortgage advisers. We can tell you everything you need to know.