The nature of property ownership is an important consideration when purchasing a property with someone else. In New South Wales there are two types of property co-ownership: Joint Tenants and Tenants in Common. Each type of property co-ownership attracts a different interest and can result in very different outcomes on the death of a co-owner so it’s critical you seek professional advice whenever considering purchasing property with another person.
Joint Tenancy
The main features of joint tenancy co-ownership are as follows:
- No separation of ownership between co-owners meaning the co-owners hold the property together as a whole.
- Ownership is not separated into identified shares with no co-owner holding any particular share solely in their name.
- All co-owners must act together.
- On the death of a co-owner, the survivor(s) automatically own the property regardless of any contrary intention which may be set out in a Will. When there is a sole survivor, that person will own the whole property and they may deal with it as they wish.
Tenants in Common
The main features of tenants in common co-ownership are as follows:
- Ownership is separate.
- Each owner has a distinct, identifiable and specified share in the property, separate to each other.
- Shares may be equal or unequal and are expressed in percentages or proportions and recorded on the title.
- Co-owners may independently deal with their share as they wish allowing a co-owner to sell, mortgage, transfer, lease or dispose their share without affecting the tenancy of the other co-owners.
- When a co-owner dies, the property will not automatically pass to the surviving co-owner(s) but will form part of the estate of the deceased co-owner to be distributed in accordance with the deceased’s Will (or pursuant to the laws of intestacy where there is no Will).
Most spouses will purchase property together as joint tenants, meaning the property will automatically pass to the survivor. However, this type of property co-ownership may not be appropriate in blended families or where purchasing a property with someone other than a spouse. When purchasing a property with someone else it is important you seek professional advice as to which type of property co-ownership is most appropriate for your circumstances. While it is always important to ensure you have an up to date and fulsome estate plan, if you elect to purchase a property with someone as tenants in common, it is imperative that you have a Will in place to deal with how your share in the property is to be dealt with on your death.
If you’d like to discuss the different types of property ownership or your estate plan further, please contact us for an obligation free discussion.