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Co-Ownership and Declarations of Trust

When you buy a property with someone else you can hold a property in one of two ways: as “tenants in common” or “joint tenants”. These terms should not be confused with a tenant who rents a property from a Landlord.

We get asked all the time what the difference is, and it is an important part of co-owing a property.

Joint tenants

If a property is held as joint tenants, each owner owns the whole of the property, they will not have a quantified share in the property, and will not be able to leave a share of the property under their will.  

If the property is sold or if there is a breakdown in a relationship, it will be presumed that all owners own the property equally, regardless of their respective contributions to the purchase price. On the death of one co-owner, their interest in the property will automatically pass to the remaining co-owner(s). The surviving co-owner(s) will then own all of the property under the "right of survivorship".

Married couples or those in a civil partnership, commonly use this method of co-ownership because the right of survivorship makes it straightforward to ‘inherit’ each other's shares in the property.

There may be valid reasons for owners not being joint tenants: for example, if one person contributes a larger amount to the purchase price and they want this to be recognised if and when the property is sold, or if there is a breakdown in their relationship.

Tenants in common

If a property is held as tenants in common, owner owns a specified share in the property. The shares may be equal, but they do not have to be.

Each owner’s share of the property can be passed on to another person, either during their lifetime, or under a will or the rules of intestacy following the owner’s death.

If a property is owned as tenants in common, then the owners should sign a Declaration of Trust. A Declaration of Trust is a document that formally records that a property is held as tenants in common and sets out the owners’ respective shares in the property. If the property is then sold, or there is a breakdown in the owners’ relationship, the Declaration of Trust will be referred to, to calculate each owner’s entitlement to the sale proceeds from the property.

How you wish to hold the property must be your own decision and is something that you should keep under review following the purchase of your property. If you decide to hold the property as joint tenants, but then wish to split your interests, you can "sever" the joint tenancy by notice and create a tenancy in common at any time.

It is important to specify how you wish to hold a property at the time of purchase, to avoid any uncertainty in the future.

However you decide to jointly own your property, it is crucial that you review your Will at the same time as your purchase to make sure that your method of ownership interacts correctly with your wishes as to the disposition of your estate.