A Guide to Beneficial Co-Ownership

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Katie Braithwaite, Paralegal | 19th May 2022

A trust of land arises automatically whenever there is co-ownership and how you choose to hold this trust of land is important. Beneficial co-ownership can be either a beneficial joint tenancy or a beneficial tenancy in common. Which option is ‘correct’ is based on personal circumstances and preference.

The most important difference is the doctrine/right of survivorship, which only exists in the case of a joint tenancy and not a tenancy in common. This means that should you hold the property as joint tenants and one co-owner dies, their share automatically passes to the surviving joint tenant(s). As tenants in common, the deceased’s share will instead pass under their will or under the rules of intestacy.

If you wish to hold the property in unequal shares, you must hold as tenants in common (although you can hold as tenants in common in equal shares too). As joint tenants, you own the whole property together so you cannot identify individual shares. As tenants in common, you are able to specify your individual share/contribution to the property by way of a deed of trust. This deed can also set out provisions for mortgage repayments and sale procedures should there be a disagreement.

So, which is best for you?

Whilst we would strongly recommend you contact your conveyancer for specific advice, below are some important things to consider prior to making your decision:

  • Have you made unequal contributions towards the purchase price/deposit? If yes, you may wish to protect the specific amount you contributed so that upon the future sale you first receive this amount back before any further proceeds are distributed.
  • Do you have a child/children from a previous relationship? You may wish to ensure your children are protected upon your death and, therefore, holding as tenants in common means you can provide for them in your will and ensure your beneficial share passes to them, not to the surviving co-owner(s).
  • Do you want to possibly avoid the probate process and be able to deal with the property quicker upon the death of one co-owner? Holding the property as joint tenants may mean you only have to show the death certificate in order to have control and deal with the property.
  • It may be in your interest to hold as tenants in common for tax/estate planning purposes. In these circumstances, we recommend you first take tax advice from qualified tax advisors.

It is important to note that a joint tenancy can be severed i.e. if you change your mind at a later date you can sever the joint tenancy into a tenancy in common.

If you would like to discuss Co-Ownership, please don’t hesitate to contact Katie Braithwaite or a member of our Residential Department.