If you’re investing in a buy-to-let property with someone else, you have two ways to purchase the property: as tenants in common or as joint tenants.
What’s the difference between a joint tenancy and being tenants in common? Let’s take a look:
What is a joint tenancy?
A beneficial joint tenancy occurs when between two and four people buy a property and own it jointly. However, the parties don’t own specific shares in the investment and can’t give away their right to the property in a Will.
If one of the joint tenants dies, the property will automatically come under ownership of the surviving joint tenant(s). In legal circles, this is known as ‘the right of survivorship’.
A joint tenancy needs four things in order to be valid:
• To have all joint tenants named on the title deeds
• To start on the same day for all joint tenants
• Equal rights for all joint tenants
• Equal interests for all joint tenants
Normally, people who are purchasing a property with a spouse, partner or family member choose to do so as joint tenants because it’s, in general, a simpler process that causes less headaches around probate.
What is tenancy in common?
When you own a property with others as art of a tenancy in common, the ownership is split equally between the individual investors. However, each party owns a specific share (not always an identical amount) of the property’s value. The amount that’s owned will be stipulated and agreed at the start of the process.
It’s possible for investors to give away their share or to sell and mortgage it. If someone is part of a tenancy in common and dies, the ownership is left to a beneficiary in their Will. If a Will hasn’t been left it will be distributed in according to intestacy procedures.
As a result, a tenancy in common won’t end even when its original owners have died. It can only end when:
• One owner buys or is given all the shares in the property
• All tenants change from joint tenants into a tenants in common
Tenancy in common is often used by co-investors because it allows them to provide their share to their loved ones in the future.
How is joint tenancy and tenancy in common recorded?
It’s common for the method of ownership to be discussed in the transfer or lease that you received when you bought the property. In more complicated cases, such as when there are unequal shares in a tenancy in common, the information will be stored in a trust deed.
If you’re struggling to find where your tenancy details have been recorded, it’s well worth talking to your conveyancer who may be able to help.
Talk to Howells about buy-to-let tenancies today
At Howells, our conveyancing solicitors are award-winning and specialise in providing commercial conveyancing advice. If you’re planning on investing in buy-to-let, we can help you look after your legal and business interests. For more information, enquire online today.
(Image: BMiz under CC BY S-A 2.0)
