When people buy a property together, they have the choice of entering into the contract as joint tenants or tenants in common. Both come with their own sets of advantages and disadvantages in the case of a split or the death of one of the owners. This article will discuss tenants in common, specifically what they are, how they work and the advantages and disadvantages of being one.

What Is Tenancy in Common?

Tenancy in Common (otherwise known as TIC) is a legal arrangement where there are two or more parties involved in the purchase of the property and they share the ownership rights. Everyone who has an independent share in the property has control over a percentage of the land. The percentage is pre-determined by those who have entered into the contract depending on what they agree and what they pay into it. All of these parties are known as tenants in common.

When you are tenants in common, there is no right of survivorship, and as such, when someone dies, and they’re part of a tenancy in common, their share of the property passes into their estate. This means that the beneficiaries will take ownership of that specific share of the property or if the individual dies and they don’t have a Will it passes to their next of kin.

How Does Tenancy in Common Work?

Owners who are tenants in common will have shared interests and privileges in all of the different areas of the property. Each tenant is not necessarily subject to an equal share as they can both own a different percentage or proportional financial share of the property in question. These percentages will be agreed upon by the parties involved.

An agreement for tenancy in common can be made at any time. Another individual is also able to join as an interest in the property after the original members have formally entered into their TIC agreement. All of the tenants reserve the right to sell their percentage or borrow against their share of the property whenever they would like.

The Advantages of Tenants in Common

There are a number of different advantages to being tenants in common. These include some of the following:

• Splitting Value

The alternative to being tenants in common is being joint tenants. When you are joint tenants, you both have equal rights to the property, but this might not always be reflective of what people have paid for it. As such, when you have a tenancy in common, there is a clear advantage as you can split ownership depending on who contributes more to the property. This is much fairer because it means if someone pays more for a property or if someone contributes more to a property, then they are going to be entitled to a bigger and more proportionate share.

• Upon Death

When you specify in your will who you would like your property to go to, you will be able to take solace in the fact that your share of the property will go directly to your beneficiaries. There is also a benefit in the fact that if you own a larger share of the property, then your share is going to go straight to your beneficiaries and not whoever owns the property with you.

• If You Split Up

You own your share of the property, and this will be the case whether or not you’re together or if you end up splitting up. You might want to consider getting a deed of trust which can be used as a means to confirm your share. Within this degree of trust, you are going to be able to agree on what happens if either of you, as owners, decides to sell.

• If the Property is an Investment

If you are interested in property investment, buying as a tenant in common will be more beneficial because you can own an unequal share of the property which means you will also have an unequal share of the beneficial interest. This can work out to be a lot more tax efficient, and it’s a much more fair way to invest.

The Disadvantages of Tenants in Common

There are also disadvantages that come with being tenants in common. These are:

• Upon Death

If you pass away and your share in the property is passed on to your beneficiaries, they may be in a position to force your spouse out of their home. You also need to make sure you have a Will in place to make sure your shares pass on to who you would like.

• If You Split Up

To make things easy if you split up, you will need to pay for a solicitor to prepare a deed of trust. Not to mention if you are married then you are going to need to file a Form 17, which will declare your shares on any rental income.

• If the Property is an Investment

When you invest in a property as a tenant in common, you are going to need to pay a solicitor in order to get a deed of trust. Similarly, if you are married, then once again you will have to file a Form 17. This is going to need to be resubmitted whenever your beneficial interest in the property changes.

Should You Be a Tenant in Common?

If you are purchasing a property, then you will need to choose whether or not you want to do so as a joint tenant or as a tenant in common. There are a number of advantages that come with becoming a tenant in common, which make it a good option for many.

Of course, if you are to take advantage of the benefits that come with a tenancy in common, it is important that you have your own will in place. If you need assistance with preparing, you will then consider enlisting the help of Norfolk Will Writing. Our team of experts will be able to help you prepare your Will and answer any and all questions that you may have. To find out more, please do not hesitate to get in touch.