Joint Tenants or Tenants in Common?
Buying property as joint tenants or tenants in common?
In this article, we discuss the difference between joint tenants and tenants in common. If you are purchasing a property with another person or currently own a property with someone and not sure how the ownership structure works, this article is for you.
What does Joint Tenants and Tenants in Common mean?
When you purchase a property, there are two common methods of ownership:
- joint tenants; and
- tenants in common
Depending on your circumstances will determine what method of ownership you will choose. We will discuss the differences between the two structures below.
When you purchase a property as joint tenants, you own the property jointly and equally. This means that together you own the property 100%, and each party does not own a defined percentage such as 60% to Party A and 40% to Party B.
Tenants in Common
Unlike joint tenants, tenants in common refers to the ownership structure whereby each party owns a separate share in the property i.e. 40% to Party A and 60% to Party B. Individuals can choose any combination of ownership provided it adds up to 100% in total.
Should I purchase a property as joint tenants or tenants in common?
There are a few main reasons why you would choose one type of ownership over the other. The main difference between joint tenants and tenants in common is how the property will be handled upon the death of an individual.
If the property is held as joint tenants between two individuals, the surviving joint tenant will take the other joint tenant’s share in the property automatically upon death – this is often referred to as the right of survivorship. If the property is held as tenants in common, each individual holds their interest in the property as an asset of their estate. This means, the surviving joint tenant will not take on the remainder share of the property ownership.
Below are some considerations before you choose the type of ownership structure:
- If you are buying a property with your spouse and intend to transfer the property to them in the future if anything was to happen you should consider joint tenants;
- If you are purchasing a property with a family member or friend and contributing separate amounts to the purchase you might choose tenants in common and split the ownership depending on the amount each party is contributing;
If you require assistance determining what structure suits your circumstances, we can provide you with advice. Do not hesitate to contact our friendly Property Law team on 07 3808 7777 or send us an email at firstname.lastname@example.org.