Selling Property Tenants in Common UK - What Co-Owners Need to Know
Selling property held as tenants in common in the UK can be straightforward when all co-owners agree, but complications can arise when one owner wants to sell and another does not. Unlike joint tenants, tenants in common have separate beneficial shares in the property, which can be equal or unequal.
What Does Tenants in Common Mean?
Tenants in common each have a defined beneficial interest in the property. For example, two owners might hold 50% each, while another arrangement could give one owner 70% and another 30%.
The shares do not automatically have to be equal. A trust deed or other ownership documentation may specify the proportions.
Can Tenants in Common Sell a Property?
Yes. If all co-owners agree to sell, the property can be marketed and sold through the normal conveyancing process.
The net sale proceeds are generally distributed according to the owners' beneficial interests after paying the mortgage, selling costs and other liabilities.
For example, if two owners have agreed beneficial shares of 60% and 40%, the remaining net proceeds would normally be divided on that basis.
What If One Owner Wants to Sell?
This is where selling property as tenants in common can become more complicated.
One owner cannot simply transfer the entire legal title to a buyer alone. The legal estate is held jointly, while the beneficial ownership can be divided into separate shares. A solicitor or conveyancer will normally need to establish the ownership structure and deal with the sale correctly.
If the other owner refuses to sell, the parties may need to negotiate a buyout or seek legal advice about the available remedies.
Can One Tenant in Common Sell Their Share?
A tenant in common has a separate beneficial interest, meaning their share can potentially be dealt with separately from the other owner's share.
However, selling an individual share in a property is very different from selling the entire property. It can be difficult to find a buyer for a minority interest, and legal, mortgage and trust arrangements need to be considered carefully.
Professional legal advice is particularly important before attempting this type of transaction.
How Are Sale Proceeds Divided?
The division depends on the beneficial ownership shares.
Suppose a property sells for £500,000, with a £200,000 mortgage and £20,000 of selling and other costs. The remaining £280,000 would be the net amount available for distribution.
If one owner has a 75% beneficial interest and the other has 25%, the respective shares would be £210,000 and £70,000, subject to the exact legal and financial arrangements.
What Documents Should You Check?
Before selling, co-owners should establish how the beneficial interest is held.
Relevant documents can include:
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HM Land Registry title
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Form A restriction
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Trust deed
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Property transfer documents
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Declaration of trust
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Mortgage documentation
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Any co-ownership agreement
HM Land Registry does not normally record the actual beneficial shares in the title register, so a trust deed or other documentation may be needed to establish the agreed proportions.
Selling After a Separation or Dispute
Property disputes between co-owners can become particularly complicated following separation, divorce or disagreement over investment property.
Possible solutions may include selling the property, one owner buying out the other, refinancing or reaching a negotiated agreement.
Where agreement cannot be reached, specialist legal advice should be obtained before taking further action.
Selling Tenants in Common Property With Fraser Bond
Fraser Bond provides practical UK property consultancy for owners, investors and clients dealing with property sales, valuations, acquisitions and complex property circumstances.
Our support can include property valuation considerations, sale strategy, investment analysis, acquisition planning and coordination with appropriate legal and property professionals.
Get the Property Sale Structure Right
Selling property held as tenants in common requires a clear understanding of the beneficial ownership and the rights of each co-owner. Establishing the ownership shares and obtaining appropriate legal advice before marketing the property can help prevent unnecessary delays and disputes.
