The legal jargon explained – Joint tenants v tenants in common.
Are you aware that there are two different ways you can own a property with another person?
When purchasing property in Queensland with another person, it is important to obtain legal advice about whether you wish to own the property as “joint tenants” or as “tenants in common”.
There are distinct differences between “joint tenants” and “tenants in common” which can significantly impact the distribution of your estate upon your death.
What does “joint tenants” mean?
To hold the property as “joint tenants” with your husband/wife/partner/relative/friend means that when either yourself or the other owner passes away, the property will transfer automatically to the surviving owner – this is known as “the rule of survivorship”. This is the most common way for a husband and wife to co-own a property.
What does “tenants in common” mean?
If you purchase a property with a co-owner as “tenants in common”, you will each hold a share in the property based on the proportion s recorded on the title to the property and each share is divisible. That means, that upon the death of a co-owner, the share held by the deceased person will be transferred to the beneficiaries outlined in that person’s will. This may not be the other co-owner of the property. It is therefore important that if you own property as tenants in common with a person, that your will accurately reflects who you wish to receive your share in the property upon your death.
Issues to consider
Ownership of property as “joint tenants” or “tenants in common” is not only an important consideration when purchasing property. If a joint tenancy is not severed, an ex-spouse may automatically inherit their former spouse’s share of joint property. Joint ownership of property can also be a valuable tool for estate planning and protection of property as testators can ensure property is transferred automatically and cannot be subject to a challenge.
If you would like advice on how the above information could impact upon your estate planning documents, please do not hesitate to contact our experienced solicitors at Lewis & McNamara.