Change of Tenancy
You can own your property as either ‘joint tenants’ or ‘tenants in common’.
The type of ownership affects what you can do with your property if your relationship with a joint owner breaks down, or if one of the owners dies.
As joint tenants (sometimes called ‘beneficial joint tenants’):
you have equal rights to the whole of your property;
the property automatically goes to the other owner(s) if you die;
you cannot pass on your ‘part’ of ownership of the property in your will, as it automatically goes to the other joint tenant(s) on your death. This is called Rights of Survivorship.
As tenants in common:
you can own different shares of the property, for example you could own 50% and your partner could own 50% or you could own 25% and your partner could own 75% et cetera;
the property does not automatically go to the other owners if you die but forms part of your own estate;
you can pass on your share of the property in your will or gift it into a trust while still alive.
Joint tenants are registered on the same deed at the same time - it’s one transaction where they act as one party, which is why the property immediately goes to the other owner(s) if one of them dies. On the other hand, not all co-owners need to enter into a tenancy in common at the same time. You can obtain interest in a property years after the other co-owners originally set up the tenancy in common.
You can change from being either joint tenants to tenants in common or vice versa any time you wish, provided you own the property outright – if the property is mortgaged see below.
You can also change from sole ownership to tenants in common or joint tenants, for example, if you want to add your partner as joint owner, and this can also be done the other way round. This is called transferring ownership.
If the property is mortgaged, then the mortgage lender will need to consent to the change from joint to common tenancy. As everyone’s situation is different, we will talk with you more about this during your initial discussions with Castle Estate Solutions, if it’s applicable.
As you can see from the above, if your property is owned under a joint tenancy, the severance of that tenancy to make a common tenancy is very often a necessary first step in both Long Term Care planning and Inheritance Tax planning as both planning mechanisms often rely on moving half of the value of your property into a trust on the first death.