When a property is purchased in joint names, regardless of the relationship between the purchasers, the property can either be held as joint tenants or tenants in common.
In summary, if the property is held as joint tenants there is a presumption that the property is owned equally between the parties. When the property is owned in this way an automatic right of survivorship also applies whereby in the event of one of the joint owners dying, their half share in the property will pass automatically to the other joint owner. The right of survivorship applies whether or not the parties have made a will.
Tenants in common
On the other hand, if a property is held by the purchasers as Tenants in Common the parties may own the property in equal or unequal shares. For example, when the property is purchased, one owner could own a larger share than the other to reflect their larger contribution to the purchase price. When the property is owned in this way, there is no right of survivorship. In the event that one of the joint owners die their share in the property would pass in accordance with their will or if they have not made a will, the intestacy rules.
Joint tenants or tenants in common?
When buying a property it is the duty of a conveyancing solicitor to discuss with the purchasers how they would like to own the property together. If the parties are in agreement and intend for the property to be owned solely by one party when the other dies then it is suitable for them to own the property as joint tenants. However if they have expressed the wish that they would like their share in the property to pass to somebody else by way of their will or intestacy, they will be advised to purchase the property as tenants in common. The conveyancing solicitor may then discuss a declaration of trust to be prepared which will confirm the shares that each party will own.
Severance of tenancy
If a property is owned as joint tenants, it might be that the parties decide to or it becomes necessary to sever the joint tenancy and instead own the property as tenants in common. If a tenancy is severed the parties will remain to own the property together but will each have a share to dispose of as they wish without there being an automatic right of survivorship.
Wills and severance of tenancy
When you go to see a solicitor about making a will they will discuss your circumstances with you including your assets, family circumstances and your last wishes amongst other matters. As part of this information gathering process the will drafting solicitor will then check how any joint property is held to ensure that they are capable of being disposed of as you wish in your will.
By way of example, you and your sibling own a property together equally as Joint Tenants and you have both recently decided that instead of each other automatically receiving the other’s equal share in the property, you intend for your respective partners to inherit your share as per your Wills. Your wishes for your partners to inherit your share in the property would not be achievable whilst the property is held as Joint Tenants because the automatic right of survivorship would mean that your shares automatically transfers to each other despite the wishes in your will. The solicitor drafting your will would therefore explain that a severance of tenancy is required in order for your wishes to be achieved. This will stop the property being held as Joint Tenants and instead become an ownership in Tenants in Common.
There has been an increase in severances of joint tenancies in second marriages as it is becoming more likely that at least one spouse if not both have children from a first marriage and their wishes are to leave their share in the property to their respective families.
What if the Will does not work properly because the solicitor did not check how the property was held?
As a potential beneficiary who has lost out on a share of a property despite the intentions of the deceased to leave it to you, you may have a claim as a disappointed beneficiary against either:
- a solicitor if there is evidence that the deceased took legal advice from a solicitor in respect of the preparation and drafting of their Will; or
- the surviving tenants if it can be shown that there was a mutual agreement or a course of dealing sufficient to evidence that it was intended by the tenants that the property was intended to be held as tenants in common.
Whether a claim can be bought and against whom will depend on all of the facts and circumstances which will require investigation. Do not hesitate to seek legal advice regarding these types of negligence claims as there are strict time limits in which you are required to bring your claim.
The two scenarios below explain the situation that a beneficiary, and from experience, frequently an adult, minor child or grandchild, may find themselves in if advice is not sought and given to the deceased about the ownership of property and the effect of types of ownership when making a Will.
A daughter found herself disappointed that her father’s property had entirely passed to her father’s second wife despite the fact that it was his intention that the property should be inherited in equal shares by both his daughter and his second wife.
The Will had provided that the property should be left in equal shares; however the property was owned as joint tenants by her father and his second wife and as a result of the ownership as joint tenants, the property automatically transferred to the wife under the rules of survivorship.
A mother had intended to leave her property and its benefit equally between her four children upon her death. At the time of drafting her will in which she had expressed that her property was to be split equally between her 4 children and in the event that they did not survive their descendants, she also instructed the solicitors to arrange for the property to be transferred into the names of herself and her four children. The property ownership was recorded as joint tenants. Two of her children died and the families of these two children were disappointed to find out that the provisions in the Will did not include the property as this has passed to the remaining living children under the rules of survivorship.
It is now not unusual for people to divorce and remarry and for families to be extended well beyond the historic norm of 2 adults and 2 children. It is now perhaps more important than ever that the ownership of property is understood and checked to make sure that the ultimate beneficiaries of property are those that the deceased intended for and not those prescribed by a rule of law.