Property ownership – joint tenants or tenants in common?

When purchasing property where there is more than one buyer the ownership of the property can be held two different ways, as a joint tenancy or tenants in common.

Joint tenancy

A joint tenancy is where the parties own the property in equal shares jointly.  The effect of a joint tenancy ownership is that in the event of the death of one owner, their share in the property will automatically pass to the surviving joint tenant/s despite any provisions in the deceased’s Will.

Tenants in common

With tenants in common the owners of the property will each hold a share in the property (for example a 60/40 or 99/1 or any other combination provided that the total is 100) separately.  On the death of one owner their share in the property will pass in accordance with the provision of their will or the laws of intestacy should a valid will not exist.

So, what happens if I hold property as a joint tenancy but wish to change to a tenancy in common?

At any time, you can give notice to the co-owners of the property severing your interest from a joint tenancy.  Where there are three (3) or more co-owners the party who has served a notice will hold their share as a tenant in common with any other co-owners (the remaining co-owners will continue to hold the property as joint tenants between themselves).

When is a joint tenancy not appropriate?

A joint tenancy will not be appropriate in circumstances where the parties wish to hold the property in unequal shares.  Should you wish for the interests in the property to be held other than equal (for example, a 99% and 1% split or another other percentage split) for the purposes of tax, duty or asset protection then you will be required to hold the property as tenants in common.  Care needs to be taken when purchasing a property to determine is a joint tenancy or tenancy in common is appropriate, because if parties wish to change the way a property is held and the percentages held change after purchase, this will result in transfer duty being imposed on the party gaining a higher percentage of the property.

If you are purchasing a property and have any questions about how to hold the property or any other property law matter, our property law team can assist you with any query you may have.

Written by Shiloh Quill – Solicitor