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Tenancy in Common Agreement

Tenancy in Common Agreement Solicitors

Tenancy in Common (TIC) is a legal arrangement where two or more parties share ownership rights in a property or land. Each owner may control an equal or different percentage of the total property, whether it's a commercial property or residential. At Lawhive, our network of property lawyers and conveyancers offer personalised advice with property ownership and tenancy in common agreements. We provide a fast, affordable effective service, delivered through our online platform. So you can get legal help wherever you are from the UK's top property solicitors.

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What is a tenancy in common agreement?

A tenancy in common agreement is a legal document used to divide property ownership between two or more people. It allows owners to have separate shares in the property, which can be unequal.

This agreement converts a joint tenancy to a tenancy in common. Tenancy in common agreements can be established at any time, allowing individuals to join later. Each tenant can also sell or borrow against their ownership independently.

Who should use a tenancy in common agreement?

A tenancy in common agreement is typically used by individuals who co-own property and want to divide ownership shares separately like:

• Couples who want assurance that, if they separate, each will receive a fair share of the property sale based on their contributions.

• Groups of friends, siblings, or family members buying a house together;

• Individuals investing in property with a business partner.

Many people also change from joint tenants to tenants in common so they have more control over what happens to their share of a property when they die. For example, to make sure a child from a previous relationship inherits their share of a property.

This is because there are rules about who inherits what in terms of property shares when a co-owner dies, depending on whether they are tenants in common or joint tenants.

What is a tenancy in common?

Tenancy in common is when owners share a property in separate shares, which don't have to be equal. This setup is useful for friends, business partners, or relatives buying a house.

For example, two tenants might own the property in shares of 70% and 30%. If one owner dies, their share doesn't automatically go to the owner. Instead, their share can be left to others in a will. Each share can technically have its own mortgage, but lenders usually require a joint mortgage for tenants in common.

What is a joint tenancy?

Joint tenancy involves 2-4 people co-owning property together, viewed as a single owner in law, with each having an equal right to 100% of the property. It's often the default ownership for homeowners when purchasing property.

Key characteristics include:

• If one owner dies, others automatically inherit their share (rule of survivorship);

• Owners cannot leave their share in their will;

• If owners have a mortgage, they're jointly and individually liable to maintain it, meaning any owner can be pursued for the full debt if payments are missed;

• Selling the property requires agreement from all owners, which can be challenging. For example, if a co-owner is deemed to not have mental capacity, legal permission may be needed from the Court of Protection unless a Lasting Power of Attorney is already in place.

What are the benefits of tenancy in common?

One benefit is that each person with a share has control over their portion of the property.

For couples who are not married or in a civil partnership, tenancy in common allows them to pass their property to their children in two halves.

Tenants in common vs joint tenants

Can you change ownership from joint tenants to tenants in common?

Yes, you can switch from the default form of property ownership (joint tenants) to tenants in common at any time, and vice versa. To do so you should:

1. Talk to the co-owner about changing the ownership structure and mutually agree to the change;

2. Decide on the percentage of shares each owner will have;

3. Prepare and sign a Declaration of Trust outlining the new ownership arrangement, including each owner's percentage share and any specific terms or conditions;

4. Apply to the Land Registry to update the property ownership details and pay the relevant fee;

5. If there's an existing mortgage on the property, inform the lender about the change in ownership.

It is also possible to become tenants in common with equal shares by severing the joint tenancy. This process does not need agreement from the other owners and can be done by filling out the relevant form (Form A restriction) and sending it the the Land Registry. You'll also need to give a notice of severance to any owners who don't agree to the change.

Once the joint tenancy is severed, you and the other owners will each own a share of the property and you'll have the same rights as tenants in common, including the right to decide who inherits your share.

It's important to know that there are two levels to property ownership: legal ownership and beneficial ownership.

Legal owners are individuals who are registered at the Land Registry. They have the right to control and sell the property. On the flip side, beneficial ownership outlines financial interests in the property.

Legal ownership and beneficial ownership are connected through Trust. That is, the legal owners hold the property 'on trust' for the beneficial owners, who can be joint tenants or tenants in common. In most cases, the legal and beneficial owners are the same, but the legal owner can also hold the property in trust for a third-party beneficial owner. For example, a child who is under 18.

As you can see, property law in this area can be complex. So, if you're considering switching to a tenancy in common, it's important to find a solicitor to help who can advise of the legal implications for both parties and the most beneficial course of action in everyone's interest.

Why choose Lawhive?

Lawhive's network of tenancy in common agreement solicitors and legal experts are on hand to assist you quickly and affordably, no matter where you are in the UK.

Contact us today to get a personalised case evaluation and fixed-fee quote regarding tenancy in common agreements.