Lettings to sharers are not always straight-forward. Some tenants occupy rented property as individuals, but many more occupy as joint tenants, tenants in common or licensees.
A licence to occupy property differs to a tenancy; it is mere possession to occupy the property and does not convey legal rights in the property to the licensee.
Where several people occupy property under a tenancy, they may each have an individual tenancy giving them exclusive possession of a particular bedroom plus use of other communal areas. Such tenants are tenants in common.
Joint tenants, on the other hand, hold one tenancy between them; there is a single agreement granting all of the tenants exclusive possession of the whole property.
There are four requirements for a joint tenancy to exist, and all of these must be fulfilled. There must be unity of:
TITLE – joint tenants must hold the tenancy under one document
TIME – the start and end dates of the tenancy must be the same for all tenants
POSSESSION – all tenants must be entitled to possession of the whole of the property
INTEREST – joint tenants must have equal interests in the whole of the property
Any tenancy which is not a joint tenancy is a tenancy in common
A joint tenancy is the only way in which a legal interest, such as a tenancy, can be held by more than one person. The maximum number of joint tenants is capped at 4 by section 34(2) Law of Property Act 1925, but it is possible for there to be more than four joint tenants. The joint tenancy agreement should contain the names of all of the tenants living in the property, and the first four listed on the tenancy agreement are regarded in law as the legal tenants. Any remaining tenants will have an equitable interest in the property, and a court is entitled to infer that the remaining occupiers do have a tenancy but have equitable tenancies.
Joint interests and joint liability
Joint tenants take the tenancy of the property as a group at a single rent for the whole property, and the requirement of the four unities means that the interests of each sharer must be of the same nature, duration and extent. Legally each joint tenant has an interest in, and exclusive possession of, the entirety of the whole property; unlike tenants in common they are not allocated a proportion of the property. The principle behind the joint tenancy is that, although the rights granted by the landlord are granted to a group of people, this group is treated by the law in many respects as if it was a single person.
Under a joint tenancy, if one occupier breaches the terms of the agreement, or each occupier denies individual responsibility for damage to the property, the landlord can either claim against all of them jointly or against each one individually.
Similarly, if one or all of the tenants absconds and leaves rent arrears, the landlord can make the remaining tenants responsible for making up the shortfall in rent. This is the concept of joint and several liability, and provides security for the landlord.
However, this may pose problems for a guarantor of any of the joint tenants, who may find themselves becoming liable for the whole obligations of the tenancy, not just a portion that he assumes is allocated to the individual joint tenant he has agreed to underwrite. A common solution is for the guarantor to limit the guarantee to a pre-agreed limit, or to a set proportion of any claim.
It is important for a landlord to remember that section 8(1) of the Housing Act 1988 requires any legal notices to terminate the tenancy to be served to each and every tenant. It is not sufficient to serve a single notice on just one of the joint tenants.
A periodic joint tenancy can be determined by a notice to quit given be any one of the joint tenants without the concurrence of the others, unless the terms of the tenancy provide otherwise. However, a notice served pursuant to a break clause in a lease must be served by all of the joint tenants, unless the lease expressly provides for it to be determined by one of them.
A common problem with joint tenants is that the members of the group comprising the joint tenancy may change over time. Often one of the tenants will want to leave, and this place may or may not be taken by another joint tenant. When there is an agreement to substitute or amend the tenancy in this way, this will act in law to operate to surrender the original tenancy and, by the same process, grant a new tenancy to the reconstituted group. This is often referred to as ‘surrender and re-grant’.
The parties may decide to formally enter a new written agreement, or more simply to record the change in composition of tenancy by an agreement or deed of variation (signed by all parties). Both of these methods will confirm the existence of a new joint tenancy.
However, where an agreement adds a new person as a joint tenant this may simply be treated as an agreement to vary the existing contract, although a new written agreement including all of the parties could alternatively be drawn up.
Because joint tenants have a single tenancy between them, and share the entirety of the property rather than being allocated a proportion of it, on the death of one joint tenant the deceased tenant’s interest is divided amongst the other joint tenants. It does not form part of the deceased's estate, so cannot be left by Will to anyone else. This is known as the 'right of survivorship'.