21 Aug How Should You Own Your Property? As Joint Tenants Or Tenants In Common?
Buying a property involves numerous issues, not least of which is this: how do you hold the property if there are two or more purchasers?
Land can be owned in several different ways, and by more than one person.
What are the different types of land ownership?
Land can be owned by one person, which is called sole ownership, or by two or more persons. When two or more people own property, there are two different types of joint ownership:
• Tenants in Common
• Joint Tenancy
When two or more people are buying property, they need to consider whether to buy as Tenants in Common or Joint Tenants. These are the two ways in which several people can hold title to property in South Australia and there are important legal differences between Tenants in Common and Joint Tenants
What are Tenants in Common?
A Tenant in Common is often used where the buyers of the property are friends, business associates or relations and they have pooled their funds to purchase the property. Married couples may also own property as Tenants in Common.
Unlike Joint Tenants, when one proprietor dies, that person’s interest does not automatically vest in the other Tenant(s) in Common. The Executor or Administrator must administer the will or letters of administration of the deceased proprietor in order to be able to pass on that interest.
Tenants in Common may hold property in equal shares or the shares can be apportioned to reflect each owner’s contribution.
Companies and trusts are able to acquire land as Tenants in Common with each other but because they have “perpetual succession” (they can stay in existence forever unless wound up, unlike people) a companyand/or trust cannot hold land as Joint Tenants with each other or with individuals.
What are Joint Tenants?
Joint Tenant ownership is more commonly used by married couples and others in similar relationships. It is a feature of joint tenancy that when one owner dies, the survivor is automatically entitled to become the owner of the deceased’s interest in a property.
Upon the death of a Joint Tenant the survivor may apply to the Lands Titles Office to become the registered proprietor of the deceased person’s interest. Joint Tenants each have an equal interest in the whole of the property unlike Tenants in Common who have distinct shares in a property.
Can I hold as a Joint Tenant within a Tenancy in Common?
Tenants in Common can be joint owners of their share. For example: A & B own a half share as Joint Tenants and C owns the other half. If A dies, A’s share vests in B. Upon registration of A’s death, the registered proprietors are B of a half share and C of the other half share as Tenants in Common.
Is there a limit on the number of Tenants in Common and amount of shares?
There is no limit on the number of proprietors that can be included as Tenants in Common. The minimum number is two. Similarly, there is no restriction on the amount of shares held by each proprietor. It could be a very large share – for example, 999 undivided 1000th parts – or a very small share, such as 1 undivided 1000th part.
Remember to seek advice
It is absolutely critical that you completely understand the difference between holding land in Joint Tenancy and Tenancy in Common when purchasing property from an estate planning, asset protection, stamp duty, land tax, capital gains tax and any other number of perspectives.
Don’t just rely on the advice of your conveyancer.
Seek our advice as well as that of your accountant and financial planner.