Particularly in our family law and estate planning matters, we find our clients grappling with the question “in what ownership arrangement is your property held?”
Where more than one person is to be listed on title as an owner of a property, they must decide whether they will own the property as joint tenants or tenants in common. But what is the difference?
If you and another person/entity own a property as joint tenants, each co-owner has an equal and undivided interest in the property. This means where there are two owners, they would each hold a 50% interest in the property. If there were three owners, they would each hold a 33.3% interest in the property.
If you own a property as joint tenants, the right of survivorship applies. This means on your death, ownership of the property would automatically transfer to the remaining joint tenant/s.
Owning a property as joint tenants is particularly advantageous for married or long-term de facto couples. This is because where one party to the relationship passes away, ownership of the property will automatically transfer to the surviving partner.
If your relationship breaks down or you get divorced, you should consider severing any joint tenancy you have with your former partner or spouse. This ensures that if you pass away, your property ownership will not automatically transfer to your surviving former spouse or partner. You can achieve this by registering a Transfer Severing Joint Tenancy with the NSW Land Registry Services. You do not need the consent of the other joint tenant/s to sever a joint tenancy, however, the Registrar General is required to notify the co-owners of the change to their ownership after the severance has been registered. You will also need to notify any mortgagee on title.
In the event of the death of a joint tenant, you will need to register a Notice of Death with the NSW Land Registry Services. This will ensure the surviving tenant is formally recorded as the sole owner of the property thereafter.
Our team at Cheney Suthers can assist you in registering a Transfer Severing Joint Tenancy form and/or any Notice of Death with the NSW Land Registry Services, using the electronic PEXA conveyancing platform.
Tenants in Common
If you and another person/entity own a property as tenants in common, each owner holds their share in the property completely independent from the other co-owners. Unlike joint tenancy, owning a property as tenants in common enables you to dispose of your share in the property in accordance with your wishes not only during your lifetime, but also through your Will after you pass away.
For example, tenants in common can be employed when siblings decide to purchase a property together. The first sibling may own a 70% share of the property, and the second sibling, a 30% share. If the first sibling were to pass away, their 70% share in the property would not automatically transfer to the surviving second sibling. Instead, their share in the property would be distributed according to the directions provided by their Will.
For this reason, if you own a property as tenants in common with another person, we strongly advise that you have a current Will that reflects your wishes.
The significance of property ownership is often underestimated. If you are uncertain about whether you own a property with others as joint tenants or tenants in common, you can review your property purchase contract or undertake a title search. We can also assist you in this process for a nominal fee.
For further advice, please contact our team at Cheney Suthers on (02) 6362 5433.