When purchasing a property with two or more buyers, our office is required to ask whether you will be purchasing the property as joint tenants or tenants in common.
It is important that you ensure you have the right type of ownership agreement in place in the event an owner wants to release their share or dies.
Joint tenants is appropriate where there are two buyers purchasing the property in equal shares (50/50). The purpose of a joint tenancy ownership is that on the death of an owner, the deceased share passes to the surviving owner. The effect of joint tenancy ownership is that upon the death of an owner, the deceased share in the property transfers to the surviving owner regardless of any provisions in the deceased’s Will. This form of ownership is common for most married couples and de facto relationships.
Tenants in Common
Tenants in common is where each owner owns their share in the property absolutely. There can be two or more owners with different interests in the property (i.e. 75/25, 50/50 or 25/25/25/25). The deceased’s interest in the property will pass according to the provisions of the deceased’s Will or in accordance with the rules of intestacy if the deceased did not leave a valid Will.
Tenants in common is the preferred method of ownership where there are two or more investors owning the property. Also, it is common for married and de facto couples to purchase property this way if there are children from previous relationships.
Severance of Joint Tenancy
If you own a property with another person as Joint Tenants you may be able to sever the Joint Tenancy ownership which is converted to a tenancy in common in equal shares (50/50). Severing a Joint Tenancy is common for an owner in a marriage or a de facto relationship who does not wish to leave his or her spouse or partner to become the owner of the whole property in the event of a death. Should you no longer want to be with your spouse or de facto spouse then you should consider severing your joint tenancy ownership and obtain a new will.
Please contact our Everton Park or Oxley office or complete our property enquiry form if we can be of any assistance to you.