Co-tenancy means the Ownership of Land by two or more persons in undivided shares and includes Joint Tenancy or Tenancy in Common.
1. Joint Tenancy
Joint tenancy is defined in Section 2 of the Land Act 2012. It is a form of ownership by two or more persons of the same property. The individuals share equal ownership of the property and have equal undivided right to keep or dispose of the property.
Joint tenancy creates a right of survivorship which means that if any one of the joint tenants dies, the remainder of the property is automatically transferred to the surviving owner.
It should be noted that Joint Tenancies are not automatically created. Section 91 (8) of the Land Registration Act, 2012 provides that “On or after the effective date, the only joint tenancy capable of being created is between spouses. Any Joint Tenancy other than that between spouses that is purported to be created without the leave of the Court will be regarded as a tenancy in common.”
A joint tenancy can be terminated in one of the following ways:
a) If one of the co-owners transfers or sells his or her interest to another person, thus changing the ownership arrangement to a tenancy in common.
b) A joint tenancy can be converted into a tenancy in common by the doctrine of severance. Section 91 (7) of the Land Registration Act provides that joint tenants are free to sever the tenancy which severance must be completed by registration. The parties can only sever joint tenancy by executing an instrument in the prescribed form signifying that they agree to sever the joint ownership.
2. Tenancy in Common
A tenancy-in-common property is owned by two or more persons at the same time. This type of ownership however can be split into different percentages among the tenants, it does not provide equal use, rights, or income.
In the event of death, the decedent’s share is acquired by their heirs, who then enter into the tenancy-in-common agreement with the other surviving owners.
In Tenancy in Common, the tenant has a right to possession of the property as a whole but none of them has a right to exclusive possession of any part of the property. A tenant in common may do whatever it is that they want to with their share of the property and this will not affect the tenancy of the other co-tenants in their shares.
The main disadvantage of tenancy in common lies in its dissolution. Dissolution of a tenancy in common can be a complex matter. If all owners agree to sell the property, they divide the proceeds according to ownership. However, if the owners do not agree to sell, one owner can typically obtain a partition action, which is a court order forcing the sale of the property. This can be a disadvantage if you want to keep the property but the other owner wishes to sell.
It is easier to pool resources to buy property as partners, friends or family. Note to seek legal advice on the best co-tenancy option.