Joint Tenants vs Tenants in Common – what is the difference?
Let’s start at the very beginning. A property (or land) is owned in two ways, legal ownership and beneficial ownership.
Legal Ownership
The legal owner of a property is the person, or people, noted on the Title Register for that property. The legal owner is the person who has control over the property, the person who can decide to sell it.
Beneficial Ownership
The beneficial owner of a property is the person who is entitled to the financial value in the property.
While the legal and beneficial owner can be one and the same person that is not always the case. For example, where property is held on trust, the legal owner will be the ‘bare trustee’ while the beneficial owner will be the ‘beneficiary’ as noted in a Deed of Trust.
Joint Owners or Tenants in Common?
When you look at the Proprietorship Register section of the official copy of register of title for a property it will tell you who owns that property. If there is more than one owner, they will both be named. In order to establish if those named own a property as either joint tenants or tenants in common we need to look for the entry of a restriction further down in the Proprietorship Register that will say:
“No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court.”
So what is the difference?
Joint Tenants
If you hold a property as joint tenants, all tenants are entitled to both the legal and beneficial interest in the property. In the event of one party dying, their share automatically passes to the surviving party.
Tenants in Common
If you hold a property as tenants in common, all tenants are legal owners and will be required to sign a contract for sale and transfer deed in order to comply with the restriction referred to above. However, the beneficial interest in the property is owned in specific shares as agreed between the tenants. Those shares can be set out in the Transfer Deed that you sign when purchasing the property or in a specific Declaration of Trust signed by all parties. When a tenant in common dies, their specific share in the property will be transferred in accordance with their Will.
This is a very brief overview of the position and each method of ownership has pros and cons. When considering whether to own as joint tenants or tenants in common it is recommended that you seek advice that can cover off estate planning and any potential tax implications that may arise from your choice to ensure that you set out ownership of the property in a way that best suits your needs.
How can this impact your tree disputes, well tree issues often crop up on the sale or purchase of a property or relating to planning issues or boundary issues with neighbours. All relate back to ownership of the property itself.
If you have questions about property ownership and the impact that might have on your tree issues then we can help. Contact us at hello@treelaw.co.uk
