Tenants in common is a popular way for close friends and relatives as well as couples to purchase property. But what happens when one of the tenants in common dies?
Largely, this will come down to what the person who has died set out in their will (making it vital to draw up a will if you do intend to become a tenant in common).
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Yet there are many related questions about tenants in common – what happens when one dies and, sometimes more importantly, what the still-living tenant chooses to do about it:
Who Inherits My Share Of The Property?
As tenants in common, you will own a strictly defined share of the property in question. This could be a nice round number like 50%. This share can then be left to someone in your will. If the person you own property as tenants in common with is your partner, it could be them.
To make sure this happens, you can create what is known as a lifetime interest or a life interest trust of the property. You can then give your spouse or partner who is the other tenant in common that lifetime interest.
Were you to pass away, they would then be able to continue to live in the house. Technically, they still only own half of the house (or whatever division of it they did before). But thanks to the life interest trust, they can even sell the house (with some limitations) or pass it on to children when they too pass away.
What Happens If Your Tenant In Common Died?
In most of the UK, if your tenant in common has died, the first factor that determines what happens is whether or not they left a will laying out their wishes.
If the deceased did not leave a will, the Laws of Intestacy apply. These are default rules governing who inherits what when a person dies without specifying what should happen to their estate. Under intestacy rules, the surviving tenant in common does not automatically inherit the property.
In Scotland, there is a similar but slightly different situation. The survivorship clause common to joint property ownership in Scotland usually needs to be deliberately “evacuated”.
Otherwise, the surviving tenant in common (although this terminology isn’t actually correct in Scotland) will inherit the full property automatically.
If Someone Else Now Owns The Other Share, What Are My Options?
When you own a property as tenants in common with someone else, you and the other tenant can both choose who will inherit your share of the property were you to pass away. This can lead to situations where the surviving tenant now owns the property with someone they are not as close to.
For example, picture a couple who own property in common. One of them leaves their share to a child from a previous marriage who lives far away and is little known to the surviving partner.
If this sort of situation transpires, you have three basic options:
1) Buy Them Out
One of the simplest solutions is to buy out the new tenant.
Suggesting this can be a welcome solution for the new tenant too. They may already own property they live in or have no desire to move to the area where your property is situated, for example. They may also simply prefer to have funds to do with as they will.
2) Sell The Property And Buy Something With Your Share
Alternatively, both you and the new tenant might decide together that you both want to sell the property.
You might not wish to remain living in a home you once happily shared with someone else. They might have no desire to move in. Selling the property and buying a new one with your share can work well in this case.
3) They Buy You Out
Finally, the new tenant might want to live in the property (or have it available to rent out) while you might have no desire to be involved with it anymore.
In this situation, the new tenant may wish to buy you out. You might even suggest this as an option if you feel it would be the best solution for you. They can, as they say, only say no.
What happens when one of the tenants in common dies?
It’s clear that whether or not the deceased left a will is the deciding factor in what can happen when one of the tenants in common dies. This makes drawing up a will very important. However, if you are the surviving tenant, you have several options as to what you can do. Consult legal advice and think about what feels right before you make your choice.
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