Joint tenants vs tenants in common


People commonly purchase property together. This is a big step, so it is important to consider the division of ownership. That’s why we have this question of joint tenants vs tenants in common?

At first glance, these terms sound similar. However, they have different legal and financial effects on the rights of the registered proprietor should one of the parties exit the property ownership, either by death or by selling the property. This article explains the differences between joint tenancy and tenants in common.

It is imperative that you choose the correct type of ownership at the start of the purchase process which will help to prevent any problems down the track if one of the owners wants to relinquish their share, or upon the death of a co-owner.

TYPES OF OWNERSHIP

joint tenants vs tenants in common are the two most common classifications of ownership of a property. Whilst both tenancies give each party ownership rights and a share of the property, the main difference between these two kinds of tenancy is the fact that there are different rules concerning the death of one of the tenants.

Below is some useful information to differentiate the joint tenants vs tenants in common

JOINT TENANCY

If you purchase as Joint Tenants, both purchasers own the property together. You cannot specify a percentage of ownership, rather each owner holds 100% jointly with the other owner. You can have more than two Joint Tenants on Title. An example of a joint tenancy is the ownership over a house by a married couple.

When parties own property as joint tenants, this means that:

  • All joint tenants have equal ownership and interest in the property; and
  • A right of survivorship exists.
    The right of survivorship means that if one of the joint tenants dies, the property will automatically pass to the surviving joint tenant. This happens regardless of any contrary intentions in the Will of the deceased. Therefore, it is important to consider the way a property is owned when preparing Wills and an estate plan.

Commonly, joint tenants are husband and wife or couples in long-term relationships. However, this type of property ownership can also be used for other property ownership arrangements where all parties are content with the right of survivorship. Unless you specify otherwise when you are purchasing the property, the law assumes that your purchase is a joint tenancy.

Ending a Joint Tenancy

The joint tenancy will come to an end in the following circumstances:

  • when the property is sold to a third party;
  • when joint tenant “A” transfers their interest to joint tenant “B” (meaning joint tenant B owns the property in full); or
  • when one of the joint tenants unilaterally severs the joint tenancy (this can be done to protect the interest of one of the joint tenants in the case of a relationship breakdown).

TENANTS IN COMMON

Tenancy in common, on the other hand, refers to ownership over a certain property by parties who do not automatically have a right of survivorship (for example friends or siblings). They are co-owners of the property, however, their shares and interest over the property do not have to be equal and depend entirely on the agreed shares of the parties i.e. from 1% to 99%.

You can have more than two Tenants in Common on the title. Tenancies in common also may be obtained at different times; so an individual may obtain an interest in the property years after one or more other individuals have entered into a tenancy in common ownership.

As each purchaser owns their share, they can sell or transfer their share as they please. In a tenancy in common arrangement, if one of the parties dies their interest in the property forms part of the deceased’s estate and does not automatically pass on to any co-owner of the property. Tenancy in Common is usually the way that unrelated parties who want their families to inherit their share hold property. It is also common when purchasers are contributing unequally to the purchase and they want this reflected on the title. In theory, each share can be separately sold and mortgaged, however, this is difficult in practice. There are essential differences between joint tenancy and tenants in common. They will especially affect what happens when one person wants to sell their interest in the property. Therefore, before you leap, speak with your Conveyancer who can provide advice on:
  • The best form of ownership for you; and
  • The effect on estate planning or selling the property in the future.
    There are also significant tax differences between joint tenancy and tenants in common arrangements. Therefore, you should also consult your accountant or financial advisor about the tax and other financial implications of each type of ownership.

If you are still unsure as to the differences between joint tenants vs tenants in common or would like further information on property ownership, contact our Conveyancing team today, where one of our experienced and knowledgeable Conveyancers will be happy to discuss joint tenants vs tenants in common further.

We go above and beyond at Hunter Legal & Conveyancing to ensure our fixed fee service includes everything you need to buy and/or sell your property with ease. With over 30 years experience in Conveyancing and with HLC being a 7 day a week service, any questions you may have can be answered immediately. After hours also includes weekends, so if you want to secure your sale and/or purchase quickly you can call our professional Conveyancing team to get your matter underway.

We look forward to assisting you to ensure your property matters are on time and hassle-free. Alternatively, feel free to call our office on 1300 224 828 or use our contact page.

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