If I am taking instructions for a Will and the clients own a property jointly I always ask whether they know if they hold the property as joint tenants or tenants in common? More often than not the client does not know or will ask “what does that mean?”
It is important to establish how a jointly owned property is held as this may affect and alter the advice I give clients when they are thinking of making Wills.
What is a Joint Tenancy?
This type of tenancy means that the parties don’t have distinct shares in the property, they instead own equal shares of the property. If either party died, then the rule of “survivorship” applies. This means that the property automatically passes to the surviving joint tenant. This is regardless of whether or not the parties have Wills.
Tenants in Common
This type of tenancy differs from a joint tenancy in that each party has a distinct share in the property. For example, if two people owned a property, they may hold a 50% share. If either party died the rules of survivorship do not apply in these circumstances and the property will not automatically pass to the surviving owner. Instead, the deceased’s share in the property will fall into their estate and either pass under the terms of their Will or under the rules of intestacy.
Severing a Joint Tenancy
Owing a property under a joint tenancy may not be the right arrangement for some people, especially those who may be remarried couples and have respective children from previous marriages or relationships. It is possible to sever a joint tenancy so that owners can hold their property as tenants in common and then deal with their share of the property under the terms of their Will. This option is becoming increasingly common as a way of estate planning with a view of potentially limiting an inheritance tax liability, limiting care home fees or as a means of providing for children from previous relationships.
If this is something that you would like to discuss further, I would be happy to assist. Please call on 01429 235616 or email firstname.lastname@example.org
TMJ Legal Services has joined in with the local community to create a Live Advent Calendar on Gilesgate Bank in Durham. With the help of local illustrator and surface pattern designer Rhianne Sian, our Durham office has decorated an advent window which will now be lit until Christmas Day. Each day another building in Gilesgate will reveal their window until the doors of St Giles Church open on Christmas Eve to reveal the last decorated window.
Visit our Facebook page for images of our decorated window or visit our Durham office to see it in person.
St Giles Church is arranging for carbon offsetting for the extra electricity used.
In this modern era where relationships are so diverse, it would probably be accurate to say that everyone knows at least one individual on a personal level who is a professional. Whether it is friend who is an accountant, a cousin who is a lawyer, or a neighbour who is an architect, most people have at least one contact who may be persuaded to offer them “mates’ rates” - a discounted price for professional services. This can often lead to two significantly different perspectives; the individual looking for the deal tends to expect the work to be carried out just as well as it would have been should they have entered into a formal contract with the supplier, whereas the acquaintance who is drafted in on "mates' rates" to save money may not share the same expectations.
This area of law was clarified in the recent case of Burgess & Anor v Lejonvarn  EWCA Civ 254. In this case Mrs Lejonvarn, a former neighbour and friend of Mr and Mrs Burgess for several years, was asked to carry out their garden landscaping after an initial quote from a professional of £150,000 was considered to be too expensive. Mrs Lejonvarn agreed to carry out the work for her friends and agreed not to charge until the latter stages of the project., as a favour to them as personal aquaintances. Unfortunately, the budget overran and the relationship between parties started to break down until Mr and Mrs Burgess replaced Mrs Lejonvarnin with the contractor who had originally provided the quote. The Burgesses claimed against Mrs Lejonvarn in contract and tort for the increased cost of completing the works (£265,000).
The court held that, despite there not being a contract in place, Mrs Lejonvarn was liable for the defects in the work completed through tort, due to the duty of care which she held towards the Burgesses to exercise her work with reasonable care and skill so long as she was working in the course of her profession as an architect and project manager.
A view has been put forward that there was a possible turning point in this case which was that Mrs Lejonvarn had done previous work for Mr Burgess and had commented in an email that she was “providing professional services” and that the Burgesses would be relying on those services to “prevent cost increases and unacceptable results.” This may have engrained her duty of care to the Burgesses for any work she carried out for them in the future unless she confirmed that her position had changed regarding the quality of work.
We can, then, distinguish a scenario of a coffee date between an accountant and business man discussing options, to one where a business director has instructed an accountant who happen to be related to one another. With one pair, there is a relationship between relatives but with the other there is the addition of a contractual and fiduciary duty created by the signed engagement letter, the effect created by Mrs Lejonvarn's email to Mr Burgess.
Similar to the latter point is the case between the Burgesses and Mrs Lejonvarn. Mrs Lejonvarn had a relationship of friendship with the Burgesses from previously living as neighbours to each other and keeping in touch, and a professional relationship derived from Mr Burgess providing business to Mrs Lejonvarn in her professional role.
Unfortunately, both avenues of the relationship could not be sustained whist proceedings were ongoing and, as Judge Nissen commented, mediation may have been a more appropriate way of resolving such a dispute.
It is inevitable that this will not be the last case of its kind and the issue for friends and relatives who share these informal yet professional relationships is where to draw the line.