When you own a property, you do so either as Joint Tenants or Tenants in Common and there are crucial differences between these two options.
Joint Tenants have equal rights to the property and are unable to pass on ownership in their will; the property automatically goes to the other owner on death.
Tenants in Common
When a property is held by two owners as Tenants in Common, they each hold their share of the property (usually 50/50 but this can vary) for their own benefit, which passes to their individual estates following their death.
Therefore, each party is legally responsible for their own share and they each hold the property on trust. Both owners are now referred to as ‘trustees’.
Overreaching and second trustees
“Overreaching” and “the involvement of trustees” are legal terms that may seem very daunting if you have not encountered them before. Usually, these issues arise when:
• one owner of a property has sadly passed away;
• a property is held as tenants in common; and
• the remaining owner is trying to sell or transfer the property
In this situation a restriction is placed on the property known as a Joint Proprietorship restriction.
This means that the property cannot be sold or transferred unless both parties agree or, where one party has died, “overreaching” provisions are used and a second trustee is appointed.
What is overreaching?
Overreaching is a process whereby the interest in the land itself is transferred to the sale proceeds or value in the property in order for it be sold/transferred.
Why do you need a second trustee?
After one of the owners passes, the remaining owner (i.e. the sole trustee) cannot act alone in a trust and therefore they need another trustee to act in the interests of the other party.
Therefore, a second trustee needs to be appointed to act. This can usually be a family member and they will be required to sign the transfer as a trustee.
Get legal help!
If this situation arises always be sure to seek the assistance and guidance of your appointed legal representative and they can explain the situation to you and guide you through what can be a daunting process.
It is important that you are aware of whether you hold your property as Joint Tenants or Tenants in Common and, if the latter, your Will reflects your wishes and makes appropriate arrangements for your share in the property following your death.
Our team are on hand to assist you should you need help with ascertaining how you hold your property and we can help you plan for the future to alleviate any confusion for your family.
We are able to offer advice in all areas of Law, so please do get in touch if you require any assistance. We are happy to help.
With Kerry Henderson-Parish, Conveyancing Team.