News & Views

Joint Tenancy or Tenancy in Common? This is Why It Really Matters

If you are purchasing a property with a partner, friend, family member or anyone else, your solicitor is bound to ask you whether you intend to own it as joint tenants or tenants in common. A High Court case showed why that is likely to be one of the most important questions you ever have to answer.

The case concerned a wealthy unmarried couple who bought a country house for £1.5 million to serve as their holiday and weekend home. The man paid the entirety of the purchase price and all of the costs associated with the acquisition. The relationship, however, did not long survive the property's purchase.

The transaction was completed in some haste because the vendor was anxious to achieve a speedy sale. All the documentation that accompanied the purchase stated that the property was to be owned by the couple as joint tenants. That meant that they would own it jointly and equally, rather than in two separate parts as tenants in common. It also meant that, if one of them died, his or her share in the property would pass automatically to the survivor.

The man launched proceedings on the basis that the documentation did not reflect the true position. He asserted that it had been their intention from the outset that he would be the property's sole beneficial owner and that she would hold her half of it on trust for him. She asserted, however, that she was both the legal and beneficial owner of her share in the property.

In rejecting his claim, the Court found that the documentation accurately recorded their common understanding at the time of the purchase. Their solicitor had explained to them the difference between joint tenancies and tenancies in common, and there had been no declaration of trust in the man's favour.

The Court declared that they had purchased the property as joint tenants and that nothing had happened in the years since to change that position. It acknowledged that, in one sense, that represented a harsh outcome for the man. However, given their mutual understanding at the relevant time, considerations of fairness were irrelevant to the outcome of the case.

The woman having largely enjoyed exclusive use of the property since the end of the relationship, she was ordered to pay the man £59,958 in occupational rent. The Court acknowledged, however, that she was the overall successful party in the litigation and directed the man to pay 90 per cent of her legal costs.

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