Legal English – Peter’s Pills – Lesson 119 – Real estate co-ownership (2) – Tenancy in common

Real estate co-ownership (2) – Tenancy in common

Transcript:

In the last Peter’s Pill, we saw that when real estate is purchased by two or more persons in England, the legal title can only be held as a joint tenancy which is indivisible, without shares, and in which the right of survivorship[1] applies. However equity recognises a tenancy in common in the beneficial interest.

Equity in English law is a specialised body of legal principles and remedies developed to mitigate[2] the rigidity of the common law. It focuses on fairness[3] and conscience[4], offering discretionary remedies.

Tenancy in common, which equity recognises, is a form of co-ownership in which two or more people hold the beneficial interest in separate shares. These shares may be equal (50/50) or unequal (70/30), depending on the parties’ agreement and financial contributions.

Remember, the legal title is not held as a tenancy in common. Where land is co-owned, the legal estate is held jointly[5] by the legal owners, while the separate shares exist only in equity. For this reason, tenancy in common is best understood[6] as an equitable arrangement[7] concerning the beneficial ownership[8] of the property.

The main practical effect is that there is no right of survivorship in tenancy in common. If one tenant in common dies, that person’s share does not pass automatically to the other co-owner or co-owners. Instead, it passes under the deceased’s will[9] or, if there is no will, under the rules of intestacy[10].

A declaration of trust is the favoured instrument to record this arrangement clearly. This document can state the parties’ beneficial shares and may also regulate mortgage payments[11], household expenses[12], sale of the property, or a future buy-out[13].

Tenancy in common is therefore chosen where co-owners want flexibility, especially unmarried couples, friends, relatives[14], or business partners contributing in different proportions and is most commonly established by a declaration of trust.

Thank you very much and see you next time for more Peter’s Pills to improve your Legal English!

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Note

[1] Right of survivorship – diritto di accrescimento

[2] Mitigate – attenuare

[3] Fairness – equità; quello che è equo e giusto

[4] Conscience – coscienza

[5] Jointly – congiuntamente

[6] Understood – intesa

[7] Equitable arrangement – accordo di natura equitativa

[8] Beneficial ownership – titolarità beneficiaria

[9] Will – testamento

[10] Rules of intestacy – norme sulla successione legittima

[11] Mortgage payments – pagamento del mutuo

[12] Household expenses – spese domestiche

[13] Buy-out – acquisto della quota

[14] Relatives – parenti

Read more about tenancy in common and the declaration of trust here: “Declaration of Trust for Property“.