Purchasers can buy property as either a joint tenant or as tenants in common. The principal difference between purchasing a property as a joint tenant and a tenant in common is the right during survivorship.
As a joint tenant, on the death of one of the parties, the surviving party will automatically own the entire property and the deceased’s interest in the property will cease.
A tenancy in common creates two distinct yet undivided legal interests in land. On the death of one party, the surviving party’s interest is not enlarged and the interest of the deceased party passes to their estate.
The common law establishes that a joint tenancy exists unless the contrary intention is recorded. This means that co-owners will be presumed to be joint tenants at law. Where your clients are intending co-ownership, it is essential that they use a qualified solicitor or conveyancer to ensure the contract reflects their wishes. There are also tax implications of tenancy choices and these should be discussed with the purchaser’s accountant.
A purchaser has a right under common law and statute to nominate an alternative purchaser of a property up until 14 days before settlement, unless otherwise provided for in the contract. The alternative purchaser is known as a nominee. While this right is conferred by common law, contracts often list the purchaser as Jane Citizen and/or nominee.
For stamp duty reasons, it is important that purchasers have the authority to purchase the property on behalf of the nominee, or in the case of a company, that the company existed at the time of entering into the contract. Failure to do so may see stamp duty paid twice as it will be considered a double transfer.
After a nominee has been appointed they are able to exercise the purchaser’s rights. The purchaser remains liable under the original contract and in the event of default, a vendor can still enforce a contract against an original purchaser.