Tenancy in Common Vs Joint Tenancy: How it Affects Your House Sale

The stress of selling a property is often exacerbated by issues that arise following a separation or divorce. The speed of your sale will largely depend on whether you are joint tenants or hold a tenancy in common. Where one sees equally shared ownership, the other sees one person with a larger share than the other. And this is where things can sometimes get complicated.

Our blog will explore both joint tenancy and tenancy in common and how this can impact your house sale.

What is a joint tenancy?

A joint tenancy is where two people buy a home and own an equal share of it. Rather than be split 50/50, the property is 100% owned by both people. This means that should someone pass away, ownership remains with the other person listed on the tenancy. This is known as the right of survivorship.

Joint tenancy is the option most commonly chosen by married couples or cohabiting partners and will be referred to in the title deeds. It’s registered with the Land Registry meaning that both owners can have full peace of mind their ownership status is legally recognised.

It should be noted though that even if one of you pays more for the home or puts up all of the deposit, both owners still retain equal ownership and will receive equal amounts from a sale.

What is tenancy in common?

Tenancy in common is where co-owners, and there can be more than two, each have an unequal share of the property. This means that one person may hold 60% and the other 40%. It could even be split 30/30/40 if three people owned the home.

Shares of ownership are not passed onto the other owners automatically in the event of death and instead are distributed as per the will. This could see other people take a large stake in the place you call home.

Can I sell the home if we are joint tenants?

Selling a home as joint tenants should, in theory, be easy. You both own the property and hold equal rights so any proceeds from the sale can be split as such. However, it isn’t quite as simple as that.

Before being able to sell, you both need to agree on putting the house on the market or approaching a cash house buyer. If one of you doesn’t want to sell or feels that they are owed more of the sale proceeds, you might have to meet a solicitor to find a resolution. Otherwise, you’ll be staying at the home for the foreseeable.

In the event of death, however, due to the right of survivorship, no agreement on sale will need to be found as the remaining owner is now the sole owner of the home.

Can I sell the home if we are tenants in common?

Selling a home as tenants in common can be a little more complicated. With differing shares of ownership, one person may be a majority owner with the remaining occupiers making up the minority. This means that a sale can often get messy, and that is why you need a deed of trust. A deed of trust is a legal document that details the split of the home and how sales can proceed if one person wants to sell, and the other(s) don’t.

If, for example, you are a married couple who are now separating, and one owns more of a share than the other, they will receive that share upon the sale. Without the deed of trust though, the ownership is assumed to be equal, even if one of you contributed much more than the other.

Unlike joint tenancy, selling a home as tenants in common does not require agreement from all sides. If one owner wants to sell their share, they can.

How do we split the sale proceeds?

It’s exactly as we have referenced, but remember, without a deed of trust, proceeds from the sale of a tenancy in common will be equally shared.

• Joint tenants: Equal split of sales proceeds after the mortgage is repaid.
• Tenants in common: Split as per ownership stake after mortgage is repaid.

Can we change from joint tenancy to tenants in common?

The severance of a joint tenancy and moving it to tenants in common is perhaps a little more frequent than you may think. If, for example, you plan to sell due to a change in the relationship, you may now want to be tenants in common instead.

It’s quite an easy process but it is highly recommended that you seek legal advice first. When moving from joint tenants to tenants in common, you will not need an agreement from the other owner. However, if you wanted to move from tenants in common to holding a joint tenancy, you would need each owner to agree to the change.

Should we be joint tenants or tenants in common?

If you haven’t yet reached the stage of selling but are instead looking at buying, you should consider what type of tenancy you’d prefer. There are benefits to both:

• Joint tenancy ensures equal ownership and therefore equal proceeds from the sale unless you mutually agree to discuss alternate splits with your solicitor. You’ll also need to get permission from the other owner to sell.
• Tenants in common means that you hold a specific percentage of ownership and will receive that upon sale. You won’t need to gain permission from the other owner to sell your share either.

Ultimately, it comes down to what you feel comfortable with. If you have invested significantly more in the home, it may be wise to seek a tenancy in common, especially if you are not a couple. This way you’ll get back your rightful share. However, a joint tenancy gives added security to your partner as they will remain an owner of the home if you pass away.

If you are trying to sell your home and are finding the lengthy process is causing additional stress to an already difficult time, speak to us. We buy any home and can guarantee a sale in as little as seven days. This way you avoid the additional emotional turmoil and instead focus on moving on. Get a free cash offer today and start the fast sales process today.