Difference between Joint Tenancy and Tenancy in Common
This article explains why some joint owners of a property prefer to own it as a Joint Tenancy, and some as a Tenancy in Common. It explains the difference between the two, and explains how to change from one to the other, and the costs involved in doing so.
Ownership of a House by Two or More Persons
The law provides that ownership of a house by two or more persons is a joint tenancy. By default, the land Registry effect registration as a beneficial joint tenancy because most of the time this is what house owners want. There are, however, legitimate reasons for sometimes wanting the property to be registered as a tenancy in common.
Where a house is owned and registered as a beneficial joint tenancy each owner owns 100% of the house. This means that none of the owners hold a specified share and so if one owner dies the remaining owner/s still own 100% of the property. Thus, if a husband and wife own their house as beneficial joint tenants and the husband dies, the house is still owned by the wife, who retains a 100% share in it. There is no property share to be inherited or left by Will to the wife, as she already owns it. Accordingly there is no inheritance tax to pay on the husband's death.
It also means that the owners each have equal rights to the whole of the property, and that each owner must consent in writing to a registrable disposition such as a sale or mortgage.
Tenancy in Common
A Tenancy in Common ownership provides for separate ownership percentages of the property, for example:
A owns 50% share
B owns 50% share, or
A owns 34% share
B owns 66% share
Any percentage you wish may be registered.
A tenancy in common is more likely to be created where the parties are in a second marriage and they wish to Will their respective shares to their children to an earlier marriage. It is also more likely that each will have contributed different proportions towards the purchase price.
Tenants in Common can Will their share to whoever they wish, although they will have to account for inheritance tax, if it is payable.
Converting from a Beneficial Joint Tenancy to a Tenancy in Common
To change your tenancy to a Tenancy in Common you must sever the joint tenancy. This is done by serving a Notice of Severance of Joint Tenancy on the other owner/s and sending a copy to the Land Registry together with Land Registry Form SEV, which is an application for a Form A Restriction. Form Sev is available by download from the Government website for free, using the link below. The Notice of Severance needs to be prepared for you, hence the fee chargeable. The Notice should be prepared in duplicate. The second copy is for the person served to sign it as an acknowledgement of service. It is this copy that will be sent to the Land Registry with Form SEV.
Fees Payable for Converting to a Tenancy in Common
- To obtain an up to date copy of the Title Register and prepare the Notice of Severance: £40.
- To obtain and register Form SEV at the Land Registry £0.
These documents should be sent to HM Land Registry, Citizen Centre, PO Box 74, Gloucester GL14 9BB.
We can provide this service for you, if you select the following link:
Tenancy in Common Search
Converting from a Tenancy in Common to a Beneficial Joint Tenancy
Converting from a Tenancy in Common to a Beneficial Joint Tenancy is not so simple, and can only be done if each joint tenant agrees. A Trust Deed, or Declaration of Trust, must be prepared, which is usually carried out by a solicitor or conveyancer. This Deed, which must be executed by all the owners, should be sent to the Land Registry together with Land Registry Form RX3, which is required to cancel the restriction that will have been registered when previously applying for registration as a tenancy in common. This form is free from the government website by selecting the above link.
Form A Restriction
Upon registration of your application to convert to a Tenancy in Common the B section of the Title Register will be amended by adding the following wording, which is a Form A Restriction, and which evidences the Tenancy in Common:
If you wish to obtain a copy of the updated Title Register you should wait for 2 months after submitting the application, to allow sufficient time for the Land Registry to process the application. You can then obtain an up to date copy of the Title Register by selecting the link.
Fees Payable for Converting to a Joint Tenancy
- To prepare the Trust Deed: This will depend on what your solicitor agrees to. Fees may vary between £100 - £200.
- Registration of Form RX3 and Trust Deed: £0.
- Title Register: £19.95
Your solicitor will apply to the Land Registry for registration of the appropriate documents. You will need to provide him with an up to date copy of the Title Register, which he will require to prepare the Trust Deed and to provide evidence of the current ownership structure and Title details. You can obtain an up to date copy of the Title Register by selecting the link.