Last updated on August 18th, 2015 at 01:47 pm

It’s vital that you understand the basis of any joint ownership of property before you make the purchase, so here we look at the different ways in which two or more people can jointly own a property and the consequences of choosing each method.

When owned as ‘JOINT TENANTS’ each owner owns the wholeproperty.  No more than four people can own a property in this way and 4 ‘Unities’ need to exist for the joint tenancy to be valid.  These unities relate to: ‘Title’ – there must be only one document detailing ownership of the property, i.e. the title deeds; ‘Time’ – ownership starts and ends at the same time for all owners; ‘Possession’ – all owners have the right to possess the whole property; ‘Interest’ – all owners have equal interest in the property.

With this type of ownership proceeds are automatically divided equally between all of the owners upon sale, irrespective of the amount each person spent on the purchase and subsequent improvements etc.  Also, if one owner dies, his/her share of the property automatically passes to the other owner/s, irrespective of any wishes to the contrary in the deceased’s will.  Many married couples choose to own their property in this way.

When owned as ‘TENANTS IN COMMON’ only one of the 4 interests above has to be present – the right of possession.  Each owner’s share of the property is designated at the time of purchase: they can be equal or different.   The shares are distinct and the owner has the right to give them away, sell them or take a mortgage on them.  The percentage of shares might relate to the amount of money each person has put in to the purchase, or it might simply be agreed upon purchase. Whichever it is, when the property is sold the proceeds are distributed between the owners in accordance with their stated shares.  Also, if one of the owners dies his/her share does not automatically pass to the other owner(s), but will form part of his/her estate which will pass  in accordance to his/her will, or if there is no will, will pass according to the rules of intestacy.

You might choose to own a property as tenants in common if you have children from a previous marriage, for example, and you want them to inherit your respective share of the property.  You may also choose this method if you are looking to limit inheritance tax upon your death.  Whatever the reason, you will need to make a will specifying your requirements and detailing your respective interest in the property.  This sort of agreement is best protected by a trust deed setting out your respective shares in the property.

This type of ownership is also becoming more common as people struggle to get on the property ladder and buy properties with friends and family.

So there are pros and cons to both methods of jointly owning a home; everyone’s circumstances are different and so it is vital that you take advice before you make your decision on how to buy the property, or if you wish to change the way you already own a property.

Our property department has a wealth of experience in dealing with joint property ownership and help you make the right decision from the outset.

Read more about owning property here.