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Tenants in Common | Jargon Busting

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The journey towards home ownership comes with plenty of jargon. To help you understand some less-than-familiar terminology we’re going to break down what it means to be ‘tenants in common’. Here’s what you need to know.

What does tenants in common mean?

Tenants in common is when two or more people have shared ownership of a property and their share does not have to be equal. 

As tenants in common, each owner has the right to pass on their share of the property in their will, but the property does not automatically transfer to the other should one pass away.

If you’re a first-time buyer and considering buying a property with a friend or family member, then this is something you should be aware of.

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Things to know about tenants in common

  • Tenants in common is a legal form of property ownership that gives two or more people the opportunity to buy a property together while owning a separate share of it.
  • The share of the ownership can be different and is agreed in advance.
  • If no ownership breakdown is specified, it is assumed that the property owners have equal shares.
  • Each tenant can sell or transfer their share without needing to get consent from other co-owners. This does not affect the share of other co-owners.
  • In the event that one of the co-owners dies then their share does not automatically transfer to another co-owner. It can be passed on to whoever they choose to inherit this share.
  • While co-owners remain jointly liable for the mortgage, bills, and upkeep of the property, this is in proportion to the share of their ownership. For example, if person number 1 owns 40% and person 2 owns 60% then their relative contributions are 40% and 60%.

Risks of tenants in common

As with anything of this nature, legal advice should be sought as early as possible. To ensure the details are very clearly mapped out, understood, and agreed. There are a few downsides to be mindful of this type of property ownership:

If one of you wants to sell but the others do not, then legal steps can be taken to force a sale.

If one dies and there is a will in place, then their proportion of the property would be placed in probate which is a very expensive and drawn-out process.

Joint tenants Vs tenants in common

Both are ways to co-own property depending on who you’re buying with.

Unlike tenants in common when you co-own a property as joint tenants the property will automatically be passed on to your co-owner in the event of your death. This is even if you name someone in your will – known as Rights of Survivorship.

Unlike tenants in common ownership shares are equal irrespective if someone puts down a larger deposit than the other.

Joint tenants are registered at the same time on the deeds of the property. And so they are seen as one entity. This is why the property immediately transfers to the other owner if the other dies.

How to end a tenants in common agreement

If you want to conclude a tenants in common agreement then you can:

  • Agree to buy out the share of the owner who wishes to sell the property
  • Where agreement cannot be reached then the owner who wishes to sell can apply for a court order. That would sell dividing it amongst the other owners or dividing the property
  • Sell the property in its entirety and divide the sale based on shareholding.
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Last Updated: November 22nd, 2023

Phil Spencer

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