When purchasing a property, you will be asked how you wish to own the property. There are three options; either joint tenants, tenants in common in equal shares or tenants in common in unequal shares.

As joint tenants, each person owns an equal undivided interest in the property and no specific individual shares.  Where you hold in this way, the individual’s interest passes automatically to the other if they pass away.

If you hold as tenants in common, then the individuals hold a distinct share of the property and their share passes as per any wishes left in that person’s Will. This can either be equal, so for example two people own a property and have a 50% share each, or four people own a property and each own a 25% share.

Alternatively, you can hold as tenants in common in unequal shares. This can be any percentage that suits the parties and their circumstances.

You may decide to hold as tenants in common for a number of different reasons. The most common of these is that parties have contributed unequal amounts of money to purchase the property, parties therefore wish to protect the money they originally put in. In these circumstances, the individuals may wish to have a Declaration of Trust drawn up, this is an agreement to record the original contributions made towards the purchase, and ongoing obligations towards the running costs such as mortgage, bills and general upkeep of the property.

The Declaration of Trust demonstrates how the sale proceeds are to be divided in the event of a sale and therefore creating a legally binding record to ensure that the investment is paid back to you in an unforeseen event. 

You may also choose to hold the property as tenants in common if parties have previously been married and have obligations towards an ex-spouse under any divorce agreement, or if there are children from a previous relationship.

You can change between being joint tenants and tenants in common if your circumstances change, so if there is a life event such as divorce or marriage, or a separation it may be sensible to change how the property is held.

Please remember that it is always important to ensure that your Will is up to date to ensure that any assets are distributed how you would wish, and you must ensure that when making your Will, that corresponds with how any property is held.

It is vital to seek proper advice in relation to the above, as the decision can only be made having looked at all of the facts and the individual’s circumstances.  If you have any queries on the above, please get in contact with our property team.