Tenants in Common vs. Joint Tenants

What does it mean to be Joint Tenants?

When two or more persons own property as "joint tenants", they each have an undivided interest in the entire property with the right of survivorship. That means when one owner dies, that owner's interest automatically transfers to the other owners, regardless of what is written in a Will.

What does it mean to be Tenants in Common?

When two or more persons own property as "Tenants in Common", they each own a portion of the property (typically 50% but can be any value).

Their respective interests are determined by what is written on the deed. If the property is sold, each tenant in common receives the equivalent share based on their ownership percentage. Tenants in Common is beneficial for unmarried couples or those in a second marriage or when the deposit contribution or mortgage repayments are unequal.

There is no right of survivorship when one owner dies, which means that ownership interest would pass under a Will to anyone designated by the deceased owner.

Is being tenants in common the same as joint tenancy?

No, being tenants in common is different to joint tenancy.

To illustrate the difference between joint tenancy with right of survivorship and tenants in common, consider a couple is owning property as joint tenants with right of survivorship versus as tenants in common. If one partner dies, as Joint Tenants, the property would automatically pass to the other partner. If the couple owned their property as tenants in common, then there are no rights of survivorship, and it would be up to what is written in the partner's Will as to who their interest will pass at the time of death.

What is the advantage of being tenants in common?

There are some advantages to being tenants in common rather than joint tenants. Often, the main advantage is that each tenant in common has full and complete control over who they leave their ownership interest to if they die.

This can be useful, for example, if you would like to leave your share of the property to your children from a previous relationship.

What is the advantage of being joint tenants?

Often, the main advantage is automatic inheritance if a joint tenant dies – this avoids the hassle of making a new will or having to go through probate before someone can inherit their share of the property without being liable for inheritance tax.

What are the disadvantages of tenants in common?

There are disadvantages to owning property as tenants in common.

If your intention is for the ownership interest to pass automatically at death and not go through the probate process, then it is best not to own as tenants in common.

In contrast to living as Joint tenants, with tenants in common, the estate of the deceased tenant will be subject to inheritance tax. For many, this sum can actually mean that the property needs to be sold to cover the inheritance tax bill.

What are the disadvantages of being joint tenants?

There are disadvantages to being joint tenants.

The main disadvantage is that because the property will automatically pass to the remaining joint tenant upon the death of one owner, this makes it challenging to pass on inheritance to others such as children from previous owners.

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Is it true that I can't be both joint tenants and tenants in common?

Yes, you cannot have the same property as both joint tenants with the right of survivorship and as tenants in common at the same time.

This is because the rights attached to each form of ownership are so different from one another that they would be contradictory.

What does it mean for a property owner if they are married?

If you are married, and you want the rights of survivorship, then it would be advisable to own property together as joint tenants. However, if you want more control over who gets your ownership interest at death, or do not want a spouse to have those rights automatically, then it is a good idea to own as tenants in common.

Which is the best - joint tenancy or tenants in common?

Which is best? It depends on the situation and goals of the parties involved. Generally, there are certain things to consider when deciding whether ownership should be joint tenants with the right of survivorship or tenants in common. 

Tenants in common have a more flexible interest. Consider the example of our married couple where one spouse dies first. If they had owned the property jointly as joint tenants with the right of survivorship, then that spouse's interest would pass automatically to their surviving spouse. But if they owned it as tenants in common, then that spouse's interest could be transferred to whomever that spouse desires.

Do tenants in common pay inheritance tax?

Living as Tenants in common, whoever inherits the remaining share will be liable to pay inheritance tax. If you are married and would like to avoid paying inheritance tax, it is best to own property as joint tenants with the right to survivorship.

Can tenants in common force a sale?

Yes, tenants in common have the right to force a sale if they choose.

In contrast, neither party to a joint tenancy can force a sale – rather; the property must be sold in agreement with both tenants.

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