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Types of home ownership and occupation rights

This content applies to England

The main forms of ownership and occupation rights for owner-occupied property.

Sole or joint owner

When someone buys a home on their own, only their name appears on the title deeds and mortgage deed. If more than one person buys a home jointly, there are two types of ownership to choose from. A solicitor can give further advice on types of ownership.

Joint tenants

The term 'tenant' in this context does not mean the same as in other forms of tenancy; it means someone with a legal interest in the property. They hold the property equally, with none of them having a distinct share. If one tenant dies, their interest passes automatically to the other joint tenant(s) by right of survivorship, regardless of what is stated in a will. This form of joint ownership is commonly used by established couples.

Severance of a joint tenancy

In order to avoid the effect of survivorship, a joint tenancy can be converted into a tenancy in common in a number of ways.[1] This could be, for example, as a result of the ownership of the property having been set up in unequal shares, or where a charging order has been made against the beneficial interest of one of the joint tenants.

This is particularly relevant in cases of relationship breakdown. Separating couples should get specialist advice for determination of their respective beneficial interests (ie shares).[2]

Tenants in common

Tenants in common hold distinct shares in a property. These do not have to be equal. They can leave their share in their will to anyone they choose. If they die without leaving a will, the share passes under the intestacy rules.

This form of ownership is the most common way for groups of friends to buy property together and may be more appropriate for unestablished couples living together.

Occupation rights

A person buying a home acquires some of three types of occupation right. There are advantages and disadvantages to each.

Freehold

There is no higher interest in land than freehold and it equates to outright ownership. A freehold lasts forever and the right to occupy can only be affected in limited circumstances, such as compulsory purchase or repossession by a lender or creditor who has secured a loan on the premises. A freeholder may sell their interest or may grant lesser interests, such a long lease or a tenancy, to others.

Leasehold

Leasehold is an interest in property held by a tenant from a landlord for a time limited period on payment of rent or a lump sum. The terms tenancy and lease have the same legal meaning, but the term tenancy is usually reserved for short leases.

A person with a long lease, normally one that is for more than 21 years, may grant shorter sub-leases or may assign the remaining period of the lease to someone else. In addition, a long leaseholder may have the right to purchase the freehold, or a share in the freehold where the premises is a flat. At the end of the period of the lease the property reverts to the landlord. The rights and obligations of the landlord (or lessor) and tenant (lessee) are contained in the lease, as well as in statute.

Commonhold

Commonhold is an interest created by statute, which is designed to overcome the situation that can arise with leasehold ownership where one person owns the lease and another owns the freehold. In commonhold, there is no overall landlord, and ownership of the entire property, including the shared parts, is by the owners of the each unit (usually a flat) in the building, through a commonhold association.

[1] s.36(2) Law of Property Act 1925, as amended by para 4(3) of Sch. 2 to the Trusts of Land and Appointment of Trustees Act 1996.

[2] See Jones v Kernott [2011] UKSC 53; Quigley v Masterson [2011] EWHC 2529 (Ch); Stack v Dowden [2007] UKHL 17; Goodman v Gallant [1985] EWCA Civ 15.

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