Joint property ownership
When you are buying a property with one or more other people you will need to decide which legal ownership structure is best for you and your circumstances. Your decision will be set out formally in the Transfer Deed which is the Deed passing legal title to you on completion of your acquisition of the property. This Deed will go to the Land Registry who will register your chosen type of ownership in the formal register relating to the property.
Up to four people can jointly own a property in England and Wales. If you jointly own a property it cannot be sold or mortgaged without your agreement or a court order and you cannot be forced to leave without an order from the court.
There are two ways to own or ‘hold’ a property and it is important to understand the difference between the two options as the type of ownership affects what happens to the property if a joint owner dies or if the relationship between the owners breaks down.
1. Beneficial Joint tenants
If the property is owned as joint tenants, all of the owners own the property jointly together and have equal rights to the whole property. In the event of the death of any of the owners, the property automatically passes to the other owners and so cannot be passed to any other persons under the deceased person’s Will. Typically, this type of ownership is used by married couples, cohabitees and people in a civil partnership.
2. Tenants in common
When the property is owned as Tenants in common, each of the owners own a defined and specific share of the property. The share can be equal but it does not have to be. So, for example where a couple buy as Tenants in common they can own 50% each or 60%-40%, 30%-70% and so on. As the shares are specific they can be passed to a beneficiary named in a Will or to a next of kin. Typically, this kind of ownership is used by friends or relatives buying a property together or those buying in a more business type of arrangement.
Changing the way you currently own a property.
From Joint Tenants to Tenants in Common
It is possible to ‘sever the joint tenancy’ and sometimes people do this where for example they divorce or separate and they do not wish their spouse to automatically inherit their share of the property in the event of their death, or in circumstances where one of the owners has dependents from a previous relationship that they wish to provide for in the event of their death. The steps a person would take to sever the joint tenancy would depend on whether the other owner/owners are agreeable to the severance. Where there is agreement, it is simply a matter of completing a form known as a Form A restriction which is sent to the Land Registry. The Land Registry would then register an entry on the legal title of the property to say that a severance with the agreement of all parties had been made. A Solicitor or Conveyancer would typically do this on the applicant’s behalf and that person should expect a Solicitor or Conveyancer to make a reasonable charge for doing this. There is no fee to pay to the Land Registry for dealing with the application.
Where the other owner or owners do not agree to the severance it would be necessary to serve a formal notice on them. Again, a Solicitor or Conveyancer could do this. There is a form to complete, form SEV (‘notice of severance’) which again needs to be registered at the Land Registry. A form RX1 which asks the Land Registry to register a ‘restriction’ against the legal title can also be completed. A Solicitor or Conveyancer would be able to provide detailed advice on the appropriate steps necessary and advise on what documents would be needed to support the application to the Land Registry.
From Tenants in common to joint tenants.
It is also possible to transfer a joint ownership from Tenants in common to Joint tenants. The most common reason for doing this is where the owners marry and wish to have equal rights to the whole property. The agreement of other joint owners is needed to make this change. It would be advisable to ask a Solicitor or Conveyancer to do this as a Trust Deed would be needed as well as a form to cancel an existing restriction if one has been previously registered. Supporting documentation such as A statement of truth and Statutory Declaration will also be required in support of the application to the Land Registry. The Land Registry do not charge a fee for doing this although a Solicitor or Conveyancer would make a reasonable charge for the work they would need to do.
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