In this article I explain the differences between Joint Tenants and Tenants in Common, and why the distinction is important when it comes to administering a deceased person’s Estate.
For free initial advice and guidance call our Probate Advisors on 03306069584 or contact us online and we will help you.
Joint Ownership: The Basics
There are two ways in which property can be owned jointly under the law of England & Wales:
- As Joint Tenants
- As Tenants in Common
When someone dies, the Executor, Personal Representative or Administrator of their Estate needs to find out whether the deceased owned any property, and whether the property was owned as Joint Tenants or Tenants in Common. This is because different rules apply to each.
If property is owned as Joint Tenants the Rule of Survivorship applies. This means that if one of the co-owners dies, the survivor/s will automatically inherit the deceased’s share equally between them, regardless of what the Will or the Intestacy Rules say.
So if for example three friends, Albert, Bob and Charlie, own a painting as Joint Tenants and Albert dies, Bob and Charlie will automatically become the surviving owners of that painting, even if Albert’s Will made a gift of the painting to his son.
Another important aspect of a Joint Tenancy is that everybody has an equal share of the property. In the above example, Albert, Bob and Charlie will own a third of the painting each, so if they decided to sell they would each be entitled to a third of the net proceeds.
If property is owned as Tenants in Common the Rule of Survivorship does not apply, which means that if one of the co-owners dies then the provisions of their Will (or if there is no Will, the Rules of Intestacy) will determine what happens to their share.
With Tenants in Common, it’s possible for the parties to own unequal shares of the property. To continue the above example, if the painting is owned as Tenants in Common, Albert might own 60% of the painting, Bob 35% and Charlie 5% (perhaps to reflect their respective contributions to its purchase). If Albert dies, the gift in his Will to his son will take effect and he will inherit Albert’s 60%.
You can change a Joint Tenancy into a Tenancy in Common. The legal term for this is severance. The most common method of severance is by one or more of the parties serving a notice in writing on the other co-owners.
Jointly Owned Land
The position with regards to jointly owned land is more complicated because ownership of land is split into two parts:
- The legal ownership which is reflected on the Land Registry title documents (if the property is registered) and determines who is able to sell the land; and
- The equitable ownership which is not reflected on the Land Registry title documents but determines who receives what share of the property proceeds.
The crucial thing to know is that the Legal Title to land must always be held as Joint Tenants, whereas the Equitable Title can be held as either Joint Tenants or Tenants in Common.
For example, Dan and Emma own their house together. If they hold the Equitable Title as Joint Tenants, when one dies then the survivor will inherit both the Legal and the Equitable Title to the property. This is called Absolute Ownership.
But let’s say that Dan has a strong desire for his son Fred to receive his share of the house when he dies, so Dan and Emma choose to hold the Equitable Title as Tenants in Common. In this case, on Dan’s death Emma will become the sole legal owner of the property, and is entitled to have this reflected on the Land Registry title. However Fred will be entitled to Dan’s beneficial share of the house, and so the Equitable Title will be shared between Emma and Fred. Fred is therefore entitled to a share of any sale proceeds from the house.
It’s important to know that in the above example, Fred is not entitled to have his name entered onto the Land Registry and can only be included with Emma’s consent. In most family situations consent is readily granted but it is the surviving legal owner’s choice. If the surviving legal owner does not grant consent then the Beneficiary (Fred in this case) would have to ensure that an appropriate restriction is entered against the title. This would be aimed at protecting Fred’s interest in the property, most obviously to prevent Emma from selling the property without telling him and running off into the sunset with the proceeds.
The Role of the Personal Representative
The person who administers a person’s Estate after their death is called a Personal Representative. When it comes to dealing with property in the Estate, the Personal Representative should always take the following steps:
- Firstly, find out if the deceased owns any property jointly with anyone. There will usually (but not always) be documentary evidence of this, for instance Land Registry records and share certificates.
- Secondly, if the deceased did own property jointly, did they own that property as Joint Tenants or as Tenants in Common? In the case of land, the fact of Tenants in Common is most commonly shown by a “Form A” restriction appearing on the Land Registry title. Even where there is no such restriction it’s still worth enquiring with the family and the deceased’s legal advisors to see whether any kind of severance was effected. It’s also common to find a “Declaration of Trust” has been signed by the owners of the property, which will (amongst other things) set out who held what shares of the property.
- If property was held as Tenants in Common, find out who is the Beneficiary of the deceased’s share. This will depend upon what the Will says, or the Intestacy Rules if there is no Will. There might be multiple people entitled to the share, or the share might need to be held in a Trust – for example if any of the Beneficiaries are minors.
- With the Beneficiaries identified, the Personal Representative must take steps to transfer the legal and equitable ownership to the correct people. This will usually require at the very least an assent by the Personal Representative to the Beneficiary. Where the legal ownership of land has passed automatically to the survivor, the survivor would additionally be able to make a transfer of the Legal Title to the Beneficiary, although that is the survivor’s choice. Either way, it’s important that the equitable ownership of the property is protected by sufficient restrictions against the title.
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