The consequences of not understanding the difference between joint tenants vs tenants in common can be costly. For example, how you own a property will determine whether your share of the property is passed down to your beneficiaries under the terms of your Will, or whether it becomes the property of the other surviving owners upon your death.
Unfortunately, having a well-drafted Will is no guarantee that your wishes will be carried out – especially if the Wills and estates lawyer has not taken into consideration the terms under which you own the property with others.
When purchasing a property with others, it is very important to get the manner of co-ownership correct – i.e. deciding between tenants in common or joint tenants. We discuss the differences in this article but if you have any additional questions about joint tenants vs tenants in common, please don’t hesitate to get in contact with our experienced property lawyers.
Overview:
2 Types of Property Ownership: Joint Tenants vs Tenants in Common
Joint Tenants
‘Joint Tenants’ is a form of co-ownership in which no party has a specific share in the property while the joint tenancy continues. This means that the joint tenants must have equal interests in the property, and are entitled equally to its rents and profits. There can be two or more joint tenants.
Most importantly, on the death of one joint tenant, the surviving joint tenant(s) receives the interest of the deceased owner by operation of law. This is irrespective of any Will made by the joint tenant who died, and irrespective of the intestacy rules if the deceased had no Will. Joint tenancy is usual in marriage or close domestic relationships where the spouses want to hold the property equally, and also want the principle of survivorship to apply.
Joint tenancy can be used as an effective mechanism in estate planning strategies.
Tenants in Common
‘Tenants in Common’ is a form of co-ownership in which property is held in common with others. Unlike joint tenancy, the share of a deceased tenant in common passes to his/her beneficiaries under his/her Will or intestacy and does not automatically pass to the surviving tenant(s) in common.
Tenants in common (Australia) have fixed, undivided shares in the property. Tenants in common can have unequal shares (for example, two-thirds to one and one-third to the other).
Whilst stamp duty is generally payable upon the transfer of property, exemptions may apply for transfers of interests in the matrimonial home between spouses.
How a lawyer can help with the matter of joint tenants vs tenants in common
If you make the right choice for your circumstances between joint tenants vs tenants in common, actually at the time of buying, this will save unnecessary stress to your loved ones left behind. Making the wrong choice could mean that your interest in the property will not form part of your estate and that it will automatically pass to the other co-owner. This is why we recommend seeking the advice of an experienced residential conveyancing lawyer before entering into a private sale with another owner.
If you need further information on whether you should choose joint tenants vs tenants in common, or how to create a joint or tenancy in common agreement (Australia), please contact Anna on 8362 6400 or email Anna Pantelios.
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