The Difference Between Tenants in Common and Joint Tenants

There is still a lot of confusion about the difference between holding assets as tenants in common and holding them as joint tenants. In this context the term “tenants” doesn’t have a thing to do with landlord and tenant, it refers to ownership of assets such as property and shares. For example, if you buy a house in partnership with another, usually your spouse, you normally have the ownership registered as “joint tenants.” This means that, if either party dies, the entire property is then owned by the co-owner, irrespective of the terms of the will.

However, if the property is held as “tenants in common” the share of the deceased is transferred in terms of the will of the deceased.

Which one do you choose? It depends on who you want to receive the asset if you die first. Usually, couples buy the family home as joint tenants to give each other the security of knowing that it can’t be bequeathed to a third party if there are family arguments and the will is changed.

There are three situations the occur regularly where it is probably best to hold an asset as “tenants in common.” The first is where you are buying a property in partnership with one or more friends. In most cases, you would both expect your share to go to your family if you died, not the friend.

The second is when you, and other family members, are left property through your parent’s will.  This is similar to buying a property with a friend. Almost certainly you would want your share of the estate to go to your own estate if you died, not to your siblings.

Last, but certainly not least, is when re-marriage occurs. Both parties may have children from a previous marriage, and usually prefer to keep their assets separate so they can be willed to their children from that previous marriage. Possibly the assets should be divided between those children and any that arise from the new marriage. If the house were held as joint tenants, it would go straight to the co-owner and the children may miss out.

The above examples show how important it is to get advice from your solicitor and your accountant before you sign a contract to buy property or shares. It can be very costly to change things about after the money has changed hands.