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Tenants in Common vs Joint Tenants:

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When do you become Joint Tenants

When buying a property with someone else, it is common to assume that you will automatically become joint tenants. However, many people do not realise that there is another option: tenants in common.

Understanding the differences between these two forms of ownership can be crucial, particularly if your circumstances change and you need to sever your ownership with your co-owner.Contact Trusted Will Writing Durham for more information.

what is joint tenancy? ​

Joint tenants have an undivided and equal ownership of a property. This implies that the land is shared by all tenants and cannot be partitioned into separate portions. In addition, joint tenants must possess equal shares in the property. In the event of one tenant’s demise, their portion transfers to the surviving owner(s) without the requirement of a will or probate. Joint tenancy is a prevalent form of ownership among spouses and partners who aim to ensure the passing of their share of the property to the other owner upon their death. Contact Trusted Will Writing Durham now and receive a complimentary quote.

Tenants in common ​

Tenants in common have separate and distinct ownership of the property. This means that each owner owns a specific share of the land which can be sold or transferred without the other tenant’s consent.

Tenants in common are not required to have equal shares and can own different percentages of the property. Unlike joint tenancy, the right of survivorship does not apply to tenants in common.

In the event of a tenant in common’s death, their share will pass to their beneficiaries as set out in their will (or intestacy rules if there is no will).

How to sever your joint tenancy​

If you want to sever your joint tenancy and become tenants in common, it is essential that you speak to Trusted Will Writing Durham. You will need to prepare a ‘Declaration of Trust’ which states that you both wish to hold the property as tenants in common and what percentage each owner will hold. 

This document will need to be registered with the Land Registry.

What do you need to consider?

When severing your joint tenancy, you may also need to consider the implications for any mortgages or loans secured against the property. If you are transferring equity to one owner, you may need to obtain consent from your lender or remortgage the property in order to release the other owner from any liability

.Contact Trusted Will Writing Durham and we will answer any questions you may have regarding severing your joint tenancy.

What are the tax implications​

It is also important to think about how this change in ownership could impact your tax liabilities. There may be Capital Gains Tax implications if one owner is transferring a larger share of the property to the other.

Similarly, if one owner is paying more towards the mortgage or upkeep of the property, they may be able to claim a greater percentage of the mortgage interest against their tax bill.

Protect your share of a property​

Ultimately, the decision to sever your joint tenancy and become tenants in common will depend on your individual circumstances. If you are going through a separation or divorce, you may wish to sever your joint tenancy in order to protect your share of the property. 

Similarly, if you are co-owning a property with someone who is not your spouse or partner, becoming tenants in common may be a more appropriate option.

Is joint tenancy a popular option

Having a clear understanding of the distinctions between tenants in common and joint tenants is crucial for individuals who co-own a property. At Trusted Will Writing Durham, we strive to provide comprehensive explanations of these differences. While joint tenancy is often favored by couples and partners, tenants in common offer a more suitable option for those seeking separate ownership or protective measures for their share. If you are interested in severing your joint tenancy and transitioning to tenants in common, don’t hesitate to reach out to our trusted advisors at Trusted Will Writing Durham. They will provide expert guidance, taking into account any potential tax or mortgage implications.

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