In the current market, it is common for two or more people to purchase a property together. The most common forms of ownership are:
- Joint tenancy; and
- Tenants in common.
It is imperative to consider how a property is to be held, as the two forms of ownership have differing legal implications. This article will explain the key differences between a joint tenancy and tenants in common.
Joint Tenancy
If you choose to hold the property as joint tenants, you own the property jointly and in equal shares with the other joint tenant(s). Commonly, joint tenants are married or de-facto couples.
The key difference between joint tenants and tenants in common is the right of survivorship. Under the right of survivorship, upon the death of one joint tenant, their share in the property automatically passes to the surviving joint tenant(s), regardless of any provision in the Will of the deceased joint tenant.
Tenants in Common
On the other hand, if you choose to hold the property as tenants in common, each tenant holds a defined share. The shares owned by each tenant in common may be equal or unequal. For example, one person may own 30% of the shares with the other owning 70%.
Tenants in common is often the preferred choice when purchasing a property with family members, friends, or for example, in the circumstances that uneven amounts are being contributed towards the purchase, as the right of survivorship does not exist. Rather, if one tenant in common dies, their share in the property will not automatically pass to the surviving tenant but in accordance with the provisions of their Will, or with the laws of intestacy if they do not have a Will. Therefore, if you choose this form of ownership, it is imperative to ensure that you have an accurate and up to date Will.
Taking into consideration the differences between joint tenants and tenants in common and their potential implications, it is pertinent to obtain legal advice on the best form of ownership for your needs and circumstances and its effect on your estate planning or selling the property in future.
Our property law team at Legali are happy to assist with any property law or estate queries you may have, including discussing what form of property ownership is best for you.
You can contact one of our experienced team members on 07 3188 1555 or at info@legalilaw.com.au
Writer: Monique Jeffrey of Legali
