A decision-maker may need to work out the value of a joint owner's share of a property, which can require some knowledge of property law. Property that is owned by two or more people will be held either by:
- Joint tenants (or 'joint owners' in Scotland)
- Tenants in common (or 'common owners' in Scotland)
Note - these are terms from property law to describe types of ownership, they do not refer to 'tenants' in the sense of someone who rents.
Joint tenants
If there's no evidence showing otherwise, the default assumption will be that property owned by more than one person is held by joint tenants. In that case they will each own the whole property jointly, with no separate and distinct share that they could independently sell. If a joint tenant dies, their share of the property would go to the surviving joint owners. A decision-maker will treat joint tenants as beneficially owning equal shares, eg four joint tenants must each be assigned 25% of the full sale value.
Tenants in common
Tenants in common each have their own defined share. If a tenant in common dies, their interest in the property forms part of their estate and would not automatically pass to the other owners. Tenants in common have an independent right to sell their share. A decision-maker will need evidence of the value of their share - for example, this could be based on:
- how joint owners register their respective interests at the Land Registry
- if it was inherited, what share was specified in the will
- how much money someone contributes towards the purchase price, or to improving the property, or towards the mortgage
Chapter H1 of the Advice for Decision-makers gives this example:
"Cecilia bought her council house under the right to buy scheme. She obtained a statutory discount of
£8,000. Her son Ross provided the other £32,000 necessary for her to buy the house. The statutory
discount obtained by Cecilia is her contribution to the purchase price of the property. There is no
evidence that Cecilia and Ross wanted to own different shares in the house. Therefore Cecilia owns 20%
of the property and Ross 80%."
In the above example, where no evidence is presented of the intentions of the person putting up the money towards the purchase price, the decision-maker can't just assume it was a gift with no intention to gain a financial interest in the property. An assumption that it was a gift to the other person (known as the "presumption of advancement") could only be made without any particular evidence, if it was a purchase in the name of a child for whom the transferor was responsible, or (in some cases) a transfer from a husband to a wife - see
R(IS) 2/93.
Note that it is possible to convert from one form of ownership to another. For example, if married joint tenants get divorced, they could take steps to sever their joint tenancy so that they each acquire defined shares as tenants in common, to dispose of as they wish.