Tenants In Common Or Joint Tenants – What’s The Difference?

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Tenants In Common Or Joint Tenants – What’s The Difference?

Written by: Legal Team


You are about to embark on one of life’s biggest decisions, the purchase of a property!  Congratulations, this is an exciting time, however, it can also be a stressful time as there are a number of important decisions that are to be made.  If you are purchasing the property as a couple or with another person, one of these important decisions is whether you will purchase your property as Joint Tenants or as Tenants in Common.  The decision that you make, will determine the legal rights of each party regarding the ownership of the property.

So, let’s take a deeper dive into Joint Tenants and Tenants in Common…

Joint Tenants

Joint tenancy is where the property is owned equally as one by all parties.  If one of the parties, there can be more than two, should pass away then the remaining parties will still equally own the property as one.

Joint tenancy is most commonly used by married couples or couples that are in a long-term relationship where each party is comfortable knowing that when they pass away that the property will be in the sole ownership of the surviving party.

Tenants In Common

Tenants in common allow each party to own their own share of the property.  The shares can be of equal value or unequal but must add up to 100%.  Each party who owns shares in the property has the legal right to sell or lease its share.

Tenants in common is also utilised for blended families.  For example, Jim and Mary who are a married couple, and each has children from previous relationships.  As tenants in common, should either Jim or Mary pass away they can leave their share/interest in the property to their respective child/children in their Will.

Purchasing A Property + Different Ownerships

Now that we’ve established the difference between Tenants in Common and Joint Tenants, we can take you through the different forms of property ownership and which option – Tenants in Common or Joint Tenants would be best used each.

There are four main types of property ownership, these include but are not limited to:

  1. Sole Proprietorship;
  2. Joint Tenants;
  3. Tenants in Common (in equal shares); and
  4. Tenants in Common (unequal shares).

Purchasing As Your Principal Place of Residence

If you are purchasing a property to live in and not as an investment property to have tenants living in, this is deemed to be your principal place of residence.  In the case that you are a married couple or long-term partners, the most common choice is joint tenancy.  This type of ownership provides single/equal ownership of the property.  In the instance that one party passes away, the surviving partner or owner/s will still hold the title equally.

If you are purchasing a property with friends as your principal place of residence, it would be wise to have ownership as tenants in common as this allows for each party to sell or lease their share of the property.

Purchasing An Investment Property

If you are a married couple that is looking to invest in the purchase of a property specifically for investing, then you may choose to be joint tenants.  However, a married couple is also able to purchase the investment property as tenants in common.  It is important that if one owner is looking to sell their share in the investment property they speak to their accountant to gain a greater understanding of the tax implications and/or benefits of doing so.

Friends and/or business partners that are looking to purchase an investment property, for the sole purpose of an investment would purchase as tenants in common.  This allows either of the parties to sell or lease their share of the holding.

Purchasing In Unequal Shares

To be able to purchase a property in unequal shares you must purchase said property as tenants in common.  For example, John and Sara wish to purchase a property together, however, John is contributing 75% of the purchase price and Sara is contributing the remaining balance.  John and Sara may wish to hold the ownership with John owning 75% of 100 shares and Sarah owning the remaining 25 shares.

Selling A Property + Different Ownerships

Let’s look at the other option when it comes to property when it’s time to put the for sale sign up and put it on the market and what the process is depending on the ownership structure…

Selling Your Property as Joint Tenants

If you have made the decision to sell your property, both parties must be in agreeance as you are one entity.  Should there only be one party on the title due to survivorship, then the remaining party is free to sell.

Selling Your Property As Tenants In Common

Each party that is on the title can sell their individual interest in the property without the express permission of the other parties.  This means that an individual co-owner can sell their interest to another party rather than all parties having to sell to a new owner.  If the party who is wishing to sell their share owns five of 20 shares, they can only sell their five shares.  For example, if there are three siblings and two of those siblings own the property as tenants in common, then one sibling may choose to sell/transfer their share to the third sibling.

Occupation Of The Property In The Case of Tenants In Common

There is also the scenario where there may be multiple owners of the property, however, only one of those owners is actually residing at the property.  In this case, an agreement would be strongly recommended to be made in regards to whether the owner that is occupying the property is required to pay rent and who will be responsible for the payments of the rates and taxes that are accrued for the property.

Expert Property + Legal Advice with Canny Legal

Canny Legal is here to assist you with your land purchases – whether it be for personal or business purposes.  Before you make the decision, you should be thinking about what you would like to happen with the ownership of the property should you pass away or should you wish to sell the property.

Our team of accountants at Canny Group will be able to assist you with specialised advice regarding your taxation obligations.

Get in touch with our team today and we will help you find an ownership structure that best suits all of your needs.

Pictured, Canny Legal Lawyers Gabrielle Andersen and Karlene Wightman

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