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This factsheet should be used as a general guide only - if you require legal advice you should consult a solicitor.
This factsheet attempts to explain some of the complex issues which arise when we own a property jointly with somebody else. Most of us are aware that if we are the legal owner of a property we will be able to find our names written either at the land registry or on the title deeds.
It is also possible for people to acquire an interest in a property by paying some money towards the purchase or upkeep of the property, but without formally being acknowledged as the legal owner. We call this type of interest in a property an "equitable" or "beneficial" interest. The legal owners of property will also usually have a beneficial interest. People with a beneficial interest, whether the legal owners or other people who have acquired an interest by paying money towards a property, have the entitlement to the money which is tied up in the house.
The two types of property ownership
The two types of joint ownership
Can the ownership be changed?
Overreaching
Dealing with problems
The courts' powers
Personal property
Joint debts
Other Fact Sheets
There are two types of property ownership under English law: legal ownership and what is known as beneficial or equitable ownership.
Legal ownership - The people named on the title documents are the legal owners. There will never be more than four of them. Where the property is registered in the public District Land Registry (as all properties bought on or after 3 December 1990 will be), the legal owners are the people listed as the "registered proprietors". If it is not registered (as some purchases before that date will not be), the legal owners will be listed on the document called the conveyance, which passes the property from one owner to another. You should take advice from a solicitor or the particular solicitor who dealt with your conveyancing, if you have any questions about a property that is not registered.
Beneficial ownership - This is where the real value of the property lies - it is the right to live in and use the property, and the right to share in the proceeds of any sale. A beneficial owner may also be able to control a legal owner and decide on the sale (or not) of the property. This may cause problems for a buyer, as the existence of a beneficial owner may not be revealed by searches of the land or enquiries of the seller; and yet the buyer may still have to let the beneficial owner live there (this problem can be overcome, see the section called Overreaching ).
Where the legal owners and the beneficial owners are different, this gives rise to an arrangement called a trust. A trust may be set up by a document called a deed or a written agreement (although this is not always needed); it may be imposed by the law; or it may be automatic - where there are at least two legal owners, there is always a type of trust called a "trust of land". This is so even if the beneficial owners are the same people, as beneficial owner A has rights against legal owner B, and vice versa. It is possible to have two or more legal owners holding the property on behalf of only one beneficial owner, or one legal owner holding it on behalf of any number of beneficial owners. The question of how a beneficial interest is formed is dealt with next.
The technical legal terms used to describe the different types of ownership refer to the word 'tenancy'. This makes it seem like it is about rented property. This is not the case - it is just legal jargon.
People who have a house together can own it in one, or both, of two ways: joint tenancy, and / or tenancy-in-common. The legal ownership is always a joint tenancy. The beneficial ownership can be held either on a joint tenancy or a tenancy-in-common. Remember - it is the beneficial interest which is the important one in terms of splitting up the proceeds.
Here, the co-owners do not have particular shares in the property; they own the whole thing together. Each has a right to live in and use the property (if they are a beneficial owner), during their lifetime. When one of the owners dies, the property becomes the possession of the other owner(s).
If there is only one joint tenant left, he or she becomes outright owner of the property. Because no joint owner has a defined share, their interest in the property does not become part of their estate when the die, but simply disappears.
This is the opposite of joint tenancy. (As stated above, it is only relevant to the beneficial ownership, as the legal ownership is always a joint tenancy.) Each owner has a defined share of the property. These shares are decided by the common intention of all the beneficial owners, i.e. the intention that they shared. The law decides what the shares are in one of four ways:
If a mortgage is in one partner's name, but paid by the other, this may be seen as evidence that both were intended to have a share to begin with, but the size of each share is usually fixed at the date the property was bought.
It is only if there is no evidence available of what both owners intended that the law assumes that the shares are equal.
A joint tenancy of the beneficial ownership can be converted to a tenancy-in-common by a notice called a notice of severance. This must be in writing and all that is necessary is to say that "I [name] give notice to [names of other co-owners] of my intention to sever the joint tenancy of [address]. Dated [date]", and sign it. Sending it by recorded or registered post is enough, even if it is not received. However, unless the notice says otherwise, the joint tenancy will become a tenancy-in-common in equal shares. If you have contributed more than half of the purchase price, your notice must state this.
Bankruptcy of a joint tenant also severs a joint tenancy into equal shares: if there are more than two joint tenants, the ones who are not bankrupt will continue to have a joint tenancy of their half share.
A joint tenancy can also be divided up into a tenancy-in-common if all the joint tenants agree.
The shares can be changed by agreement. This must be in the form of a document called a deed, which should always be drawn up by a solicitor.
If you are buying a property where there may be hidden beneficial owners, you do not have to worry, as long as all the legal owners agree to the sale. Any person's right to occupy the property will automatically come to an end on completion if the legal owners do this (this is called overreaching). However, there must be at least two legal owners for this to apply. If there is only one legal owner, you should insist that another legal owner is appointed, because otherwise you could have to share the property with an unexpected guest.
At the time of purchase the best way to prevent problems later on is to decide what type of co-ownership you want at the beginning; and, if you want tenancy-in-common, what shares you want. You can do this on the land registry transfer form, or in a separate trust deed. You can also use the trust deed to provide for circumstances where the courts have no powers, such as one of you wanting to buy out the other if the relationship breaks down.
If joint legal owners cannot agree that a property should be sold, the county court can order a sale. The courts can postpone the date for the property to be put on the marke, and often do so if there are children under 18. Mortgage lenders can also apply for a forced sale if the mortgage agreement is broken (e.g. if there are arrears); so can the Official Receiver where a joint owner is bankrupt. The court can also decide what share each owner has, where there is a tenancy-in-common, but cannot use this Act to alter shares or transfer property from one partner to the other.
Property can be transferred to a child, or to a parent or person caring for a child, although this is only done in exceptional circumstances if the child is 16 or over. It is very rare, most usually where the parties have more than one property.
This Act gives the court the power to exclude a violent cohabitee from the home, and gives a non-owner some protection from eviction. (The orders that the court makes in this context are called occupation orders).
Marriage and divorce do not in themselves put husband and wife in a different position when it comes to joint property. However, in divorce proceedings, the court can transfer property from one to the other, and give one spouse a bigger share. Maintenance for the spouse or a child, can be secured on property owned by the other spouse; so that later, a sale could be ordered by the court. The divorce county court can also order one spouse to buy out the other.
Ownership of funds in the account is decided by what both account holders intended. Often, there is no evidence of this, so the assets are split equally. What the law does not do is to investigate all the movements in and out of the account, as this is considered to be unrealistic.
Normally this is assumed to be the property of whoever paid for it. If it was paid for jointly, the courts look at the proportions that each owner put in. If property is bought on credit, this will be seen as joint property if it is a joint debt; property bought on hire purchase belongs to the finance company until the last instalment is paid. Vehicles are not necessarily the property of the person named as the registered keeper on the registration document, as this is not proof of ownership.
If someone buys an item in circumstances where it is clearly intended as a gift, then the recipient will be the legal owner.
As far as the lender is concerned, if a debt is in joint names, then both debtors are jointly and severally liable. This means that both are responsible for the whole of the amount owed, including any arrears. However, if one debtor is sued, they can ask the court to order the other debtor to contribute. This must be done within two years of the debtor being ordered to pay the lender.
If the debt is in one person's name, they are solely responsible for it.
We have a wide range of other Factsheets available on our website. For more information visit:
Challenging a Will
Change of Name
Changing your Child's Name
CICA (Criminal Injuries Compensation Authority)
Debt
Defamation
DIY Divorce
Employees' Personal Belongings
Harassment
Local Authority Care Home Fees
Neighbours
Parental Responsibility
Power of Attorney
Small Claims Court for Consumer Problems
Small Claims Court for Personal Injuries
The Rights of Unmarried Fathers
Withheld Deposit
We also have information about moving house and conceyancing on this website. For more information visit "Your Property Moves".
THIS FACTSHEET IS INTENDED AS A GENERAL STATEMENT OF THE LAW AND DOES NOT PURPORT TO RENDER SPECIFIC LEGAL ADVICE. SPECIFIC ADVICE ON A PARTICULAR PROBLEM SHOULD ALWAYS BE SOUGHT.