Joint ownership – an update

I have had a couple of enquiries as a result of my earlier blogpost on joint ownership – in both cases, asking whether a person who is a joint owner as a “tenant in common” can mortgage his or her share in the property separately from the other owner’s share. The answer is, “Yes and no”.

Yes, in theory a joint owner who is a tenant in common can mortgage (or otherwise deal with) his or her share – assuming there is no specific agreement to the contrary.  However, most lenders will refuse to lend on the security of a share in the property: they will want the whole property mortgaged to them because it is much easier to sell a house than a share in a house.

In theory, if the co-ownner agrees, the whole property can be mortgaged to the lender but with the co-owners agreeing that the debt will only “bite” on the relevant owner’s share; the difficulty there is ensuring that the value of the debt (plus interest, costs, etc) never exceeds the value of the relevant share. Except for relatively low value loans, therefore, it is not a practical solution.


34 Comments

  1. If one co-owner uses the whole property, without attempting to exclude the other(s), the co-owner occupying the property does not have to pay any rent or occupation fee to the other co-owner(s).

  2. If one joint owner living in the jointly owned property refuses the other entry to it, what can be done?

    How easy or difficult is it to force a sale?

    • If it is the refusing owner’s home, and they have nowhere else to live, it could be very difficult. It all depends on the individual circumstances.

  3. John Harris

    A married couple getting divorced and the the property has been changed from joint tenancy to tenants in common, will one person who has paid a major amount the initial purchase price and has paid the mortgage for the five years of the marriage be forced without a court to cede more than 50% to the other when the property is sold.

    • The first thing to say is that, where a married couple (or civil partners) own a property, their respective rights will be decided under matrimonial law (outside my scope) rather than property law. Under property law, the courts would try to discover the intentions of the parties when they bought the property (and whether those intentions changed), starting with the presumption that they were 50:50 owners. That presumption can be challenged with appropriate evidence of *intentions*, but the mere fact that one party has spent more on the property than the other is not, of itself, evidence of any change in intentions. However, I emphasise that, in the case of married couples or civil partners, this argument is irrelevant: the courts will decide what is appropriate if the relationship breaks down.

  4. This question leads on to a further question. I am a joint tenant. I agreed that my partner could take out a substantial loan in her name secured against the property and I signed the charge. We wish to sell the property and divide the proceeds. By signing the charge have I in effect accepted liability for half the loan, or am I legally entitled to half the pre-loan proceeds?

    • What was agreed between you and your co-owner about the loan? You say it is in her name, but you signed the charge; by signing it, you agreed – as far as the lender is concerned – that the property would act as security for repayment of the loan, but what did you agree with your co-owner? If (as you imply) the debt was to be your co-owner’s responsibility, then that is what applies: repayment of the loan would be out of your co-owner’s share, not yours – so you sould be entitled to half of the “pre-loan proceeds”.

  5. Hello there are 3 family members that are tennants in common and own equally a commercial piece of land that is rented out my question is if 2 want to sell does the third have to sell their share uk thank you .

    • Assuming there is no already-existing agreement to the contrary then, yes, if one or more joint owners want to sell, then they can force the sale (if necessary, applyong to the court for an order for sale) in these circumstances. Please note that the position could well be different where the property is the home of one or more of the co-owners or their dependents, but that does not apply here.

  6. Susan

    If my husband and I have a joint mortgage for a buy to let, and are tenants in common can he make a declaration of beneficial interest stating he does not derive income from it, therefore I will be taxed on the whole of the income.

    • In a word, “Yes” – it involves a pretty simple declaration of trust setting out your and your husband;s respective beneficial interests, which can be different for the capital value on a sale and the receipt of income until sale.

  7. Paul Rutherford

    My wife and I own our house as Tenants in Common as we have no children together but I have children from a previous marriage. As I am 20 years older than my wife I will probably die first leaving my part of the house to my two Daughters. Can the force the sale of the house to obtain their inheritance?

    • In the absence of anything stopping them, yes.

      I suggest that you either –
      1: make a declaration of trust with your wife, specifying that you hold the house as beneficial tenants in common, and specifying the share you each hold, and also declaring that neither of you can force a sale against the wishes of the other; or
      2: in your Wills, include a provision giving the survivor of you a right to live at the property (rent free) for as long as they want, and (perhaps) requiring your executors to cooperate in selling the house and using the estate’s share towards buying a new home for the survivor (but with the value of the estate’s share of the old house ultimately going to your children).

      I hope this helps.

  8. Stefania Ganner

    Hi I have a completed question and nobody seems to be able to give me an answer .My husband and I brought a property for which I paid the deposit .We then sold it and brought another house .In 2014 we separated and I’m divorcing him .He literally threw me out and then changed the locks As a result of his financial control where I had no money I ended up in debtand the citizens advice tolkd me my best option as to go bankrupt as at time there was arrears of £1000 on mortgage and no equity in property.The tenancy was severed a few months ago but at the same time my ex brought my beneficial share of property of the insolvency for which I am very angry about as the property now has increased in value and there is about £35000 equity and the arrears are cleared up .what ID like to know is can he sell without my permission and signature and can I claim any money out of sale or can I force him to buy me out its just so confusing and basically even though I contributed I have been left with nothing .what is my best option .Thankyou

    • As emailed privately, matrimonial law “trumps” property law, so you need advice from a matrimonial lawyer based on your individual circumstances

  9. Simon

    Hi – very interesting thread. My ex-partner and I separated a number of years ago – we were never married – and entered into a tenants-in-common arrangement at the time of separation (yes, big mistake). Fast-forward to today, my ex-partner still lives at the property. I’d like to capitalize on my share (the mortgage was paid off before we separated), but don’t see what leverage I have other than waiting & hoping – my ex-partner can’t afford to ‘buy me out’, incidentally. I was wondering if there are companies out there who specialize in this kind of situation and might be willing to purchase my share at a discounted rate? Any other suggestions also very welcome!

    • When you “entered into a tenants-in-common arrangement”, there should have been a declaration of trust, setting out what you can and cannot do in terms of forcing a sale of the property. In the absence of such a provision, the basic legal position is that any co-owner can insist on a sale. However, where the property is used as the other co-owner’s home, especially if young children are involved, getting an order for sale is not straightforward

  10. My sister owns a home as tenants in common with one of her daughters, the ratio is 88%:12% in my sisters favour. My niece is now browbeating her mother to sell and give her the proceeds for a new home in her name. There is a lot more to this, but not relevant here. The problem is my sister is over 70 and cannot stand up to her, we live 120 miles away and cannot be there every day. We did, however, recently find out about, and aborted, an agreed sale that no one else in the family was aware of. We have an LPA for our sister.

    To stop this happening again we want our sister to gift a small percentage of her ownership to her other daughter who would then be required to agree to any sale.

    So my question is, does the first niece have to give permission for her mother to gift or sell a percentage of her share to the other niece?

    Thanks

    • The answer to your specific question is “No – assuming there is no declaration of trust in place saying otherwise – your sister can transfer all or part of her beneficial interest to whomever she wishes”.

      However, that will not solve the problem: unless there is a declaration of trust or other good reason* saying otherwise, any joint owner can insist on the sale of the jointly owned property – it is not a question of a majority decision, as any one owner can insist.

      *In this case “a good reason saying otherwise” seems likely to be that (I assume) the property has always been intended to be your sister’s home; quite why her co-owner has a share, I do not know, but it seems likely that her interest is subservient to having the property as your sister’s home while she wants to live there, and that prime purpose should not be defeated by a secondary one.

      If my speculation is right, your sister does not need to transfer part of her interest to another daughter of hers, and doing so would give her no better protection against a forced sale. The best protection is the underlying reason for holding the property in joint ownership and, if the main purpose is to provide a home for your sister, that is sufficient to prevent a sale against your sister’s wishes.

      I hope this helps.

      • Justin, after I had posted my query I realised I should have mentioned the Deed of Trust. One does exist and it prohibits my niece from forcing a sale. I cannot see anything that inhibits my sister from selling any part of her ownership. Perhaps we need to engage in a private exchange on this whereupon you can review the deed of trust and advise accordingly on agreed terms.

  11. Keith Richards

    Just found your interesting blog.

    My mother made a will at my brothers insistence and it says her home is to be sold and divided equally between me and my brother. The will says I have 6 months to get out as I also lived with her and was her carer. As I previously worked away a lot it was also my main address.

    The assumptions were that the £150000 market value divided by 2 would be enough for both to find a flat as he was separated at the time. Now he is back living in his own home with his wife.

    I think the will is invalid because at the time the will was made I had become a Tenant in Common with my mother and so already owned half the house. At the time nobody asked me who owned the house, they just assumed my mother did. The transfer of ownership was started before the will and confirmed the day after. We did that to protect the house from Care Home fees and my brother.

    The other unknown at the time was that the leasehold runs out in 10 years and apparently the council will want about £35000 to buy the freehold!! Again the will solicitor did not check the Land Registry. And I also did not know. So the full market value will not be realised as assumed.

    Is the will invalid? Does it mean my brother is entitled to half her half? Can I be forced to sell?

    My goal is just to live in the house.

    • Keith: Thank you for this. Of course, every case depends on its own circumstances and the wording used, but in broad terms –
      (1) You mother cannot give away what she does not own: if you own part, that part cannot be left by your mother’s Will: she can only leave her part, which would be shared between you and your brother
      (2) Bearing in mind you already own your part and will inherit half of your mother’s part, you may be able to afford to buy out your brother’s interest: that will depend on the figures involved and on your own resources, of course
      (3) When the property was transferred into your and your mother’s joint names, you and she should have entered into a declaration of trust, which might specify whether the property can be sold without your consent or whether it must be kept as a home for you for as long as you need it; equally, there may be a similar provision in your mother’s Will
      (4) Even without such a provision, if you can show that the intention behind the transfer into joint names was to ensure you always had a home, that can be used to stop the house being sold against your wishes.
      (5) You may have a claim under the Inheritance (Provision for Family and Dependents) Act 1975 if (a) you were financially dependent on your mother and (b) her Will did not make reasonable provision for you.

      In summary, I think the Will is valid, but it could be challenged as not making reasonable provision for you in the circumstances prevailing at the time of your mother’s death and there are various other aspects to consider.

      I suggest you take the paperwork to a local solicitor and get specific advice on your position – the sooner, the better.

      I hope this helps.

      • Keith Richards

        Thanks that gives me some reassurance and direction before I find an appropriate solicitor.

        The will says: “you would like us to give the residue of your estate, including your property at ….to your boys in equal shares.”

        “on your death the property is to be sold” and “there are no continued rights of occupation” “a time scale of 6 months”. Then it says “We advised this would not be legally binding but was indicative of your wishes” – if any court proceedings. So I guess he has interpreted that as being able to make me move out now rather than after 6 months.

        Can he come and go as he wants into the home?

        I am 63 and now on Pension Credit since my mother died last week. I havve lived here for 20 years and invested a lot into the property – new central heating, repairs etc. Wet room.

        • Justin Nelson

          Keith –

          Thank you for your latest comments.

          The wording you are quoting will not be from the actual Will, but from a letter (I suspect) explaining the Will or a draft of it. There is really no substitute for seeing the actual wording in the Will, rather than relying on a summary of it which may be out of date.

          The comment about “no continued rights of occupation” rather conflicts with the “time scale of 6 months” and it is certainly possible to require the executors to allow you a period of occupation, so I don’t know what is meant by it not being legally binding.

          The fact that you have contributed substantially to improvements at the property strengthens your claim either that it was intended to be your home indefinitely or that the Will failed to make reasonable provision for you (or both).

          Your brother cannot come and go as he wants: at present, the property is your home and that should be respected. He is not – as far as I am aware – a joint owner yet, so would have no rights of access on that basis.

          He may well be an executor, and entitled to satisfy himself that the property is properly maintained and insured, but that does not give him a right to come and go as he wants.

          It is well worth seeing a local solicitor about all this.

          • Keith Richards

            Thank you I will see a solicitor soon,after the funeral and getting probate.

  12. Amani A

    Question: Who is responsible for paying the ‘existing’ mortgage ($380,000) if one co-tenant sells his share in the property to a third party?

    summary
    1. Property is located in New York; 2. Property ownership ‘Tenancy in Common’; 3. Existing single mortgage (both names on mortgage); 4. both names on deed; 5. 50/50; 6. One co-tenant wants to sell his share.

    • I’m afraid my knowledge is restricted to English law, and I have no idea what New York law provides for in these circumstances. Sorry!

  13. Hi Justin,

    There is one question that I do not seem to be able to find anywhere: can one tenant in common who own a 50% share of a 2-bedroom flat grant either a tenancy or a licence to a third party for his share of the flat (in the sense of a tenancy or licence to occupy one of the bedroom exclusively and share the rest of the flat) without seeking the specific consent of the other tenant in common? Or, in other words, is there a way for one tenant in common to rent out his 50% share of the flat without having to agree the terms with his co-tenant or would I always need his consent to choosing a tenant? He has not yet done so, but intends to move into the property himself. Though it was always envisaged and we agreed in principle that I would rent out my share, I would prefer not to have to defer to him on the terms I agree with any prospective tenants.

    Thanks,

    Mark

    • Simply by being a co-owner, you do not have the right to rent out “your share” of the property: legally, your share is not a share in the physical property itself, but a share in the proceeds of sale and in the income until sale. You would, therefore, need your co-owner’s cooperation to rent out the property or a part of it to a third party.

      However, the position is different if the property was bought with the specific intention that each co-owner would be able to rent out half the property on their own say-so without the cooperation of the other co-owner – the difficulty is in proving that was the arrangement if it has not been put in writing.

      I hope this helps

      – Justin

  14. Mike Voice

    Hi Justin, myself and 3 siblings have been left 40% of a house that my late father owned with his wife. She is to live in the house at her leisure. Are we responsible for 40% of the running costs of the house ?

    • Mike –

      I suggest that the first place to look is the Will that left your father’s share of the house to you and your siblings with a right for his wife to live there. That should specify what the conditions of the right of occupation are.

      Usually, when I draft such a clause, it requires to occupier to maintain the building and pay all outgoings, but sometimes leaves the responsibility of insuring the building to the estate or the ultimate beneficiaries (who will want to ensure the building is insured, to protect their interest), though sometimes the occupier is required to reimburse all or part of the premium.

      In some cases, on the same logic, the costs of repairs and improvements are shared, but any improvements have to be agreed by all parties.

      I hope the Will clearly states who is responsible for what, to avoid any arguments.

      – Justin

      • Mike Voice

        Thanks for reply Justin.
        The will only states ‘free use, for as long as she wishes’ . Of house and chattels.
        Our share to be in trust.
        She is saying that it needs rewire and we should pay 40% of cost as we own 40% of house.
        Mike.

        • Mike –

          That is a problem: the lack of detail in the Will leaves room for argument. On the one hand, you could argue that rewiring is needed for the house to be habitable, and the cost should be borne by the person living there. On the other hand, she could argue that the rewiring will improve the value of the property, and you should bear your 40% share.

          I suggest the truth is somewhere between the two, and that you should offer to pay (say) 20% of the cost, reflecting the improvement in the value of the property, from which you will benefit (to the tune of 40%) bit also reflecting the fact that your late father’s wife has the immediate benefit of living at the property (and, presumably, the remaining 60% share in the eventual sale value).

          I hope this helps

          – Justin

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