Joint Tenants v Tenants In Common
In New South Wales individuals can hold property in two ways: as Joint Tenants and as Tenants in Common.
If you are married or in a relationship then it is likely that you already own property with your partner as joint tenants, for example a joint bank account. This must be contrasted with a bank account in which your partner is a signatory, but is in your sole name.
While most people would regard assets being held jointly as meaning each owner is entitled to 50%, at law, the proper analysis is that each owner is in fact entitled to 100% of the property.
Property held as ‘Tenants in Common’ denotes ownership in property which is in fact separated from the other co-owner(s). Property held as a Tenant in Common may therefore be recorded as being held as a 50% share, 1% share or any percentage at all.
Should I hold property as Joint Tenants or Tenants in Common?
The overwhelming advantage in holding property as Joint Tenants is that upon death property held as Joint Tenants automatically passes to the survivor (this is called the ‘Right of Survivorship’). The Right of Survivorship also means that the asset does not form part of the deceased’s estate (although in NSW there are rules which enable joint assets to be designated as ‘Notional Estate’ in certain circumstances) and hence avoids the need to obtain a Grant of Probate. This in turn saves time and money.
It is for this reason that the majority of couples record property ownership, especially real estate, as ‘Joint Tenants’.
It is for the same reason that property owners may choose to record ownership as Tenants in Common, for instance in circumstances where property is being purchased by business partners, or couples in a second marriage. Those individuals may wish to ensure that their percentage of the property passes to their named beneficiaries under their Will, and not automatically to the surviving joint owner. There are also taxation benefits of holding a smaller percentage of property with your partner (which can only be achieved if held as a Tenant in Common), and proper professional advice should be sought from an accountant in conjuction with a solicitor before property is recorded as Tenants in Common for tax purposes.
How do I know if I own my house as Joint Tenants?
Ownership of real property in NSW is recorded on a register maintained at the Department of Lands. This register takes the information set out in the ‘Transfer’ dealing lodged following the purchase of the property. The solicitor / conveyancer assisting you on the purchase is responsible for completing the ownership details on the Transfer, and while it is common for real estate to be registered a ‘Joint Tenants’, unless you are holding the Certificate of Title (‘also known as the Title Deeds’) it is important (given the implications set out above) to conduct a search of the register to understand the true legal ownership.
What if I purchase property with another person, but I do not specify if that ownership is as Joint Tenants or Tenants in Common?
Prior to the introduction of the Conveyancing Act 1919 there was a presumption that any property purchased with another was held as a Joint Tenancy. The presumption could be rebutted by words in the document relating to the transfer, or from the circumstances, but if insufficient evidence was advanced then the property would be deemed held as Joint Tenants.
The introduction of the Conveyancing Act 1919 reversed this common law position, and today section 26 of that Act provides that a disposition to two or more persons is deemed to be made for them as Tenants in Common and not Joint Tenants.
Section 26 is still subject to the express terms written on the document creating the transfer, and today it is unlikely that the Department of Lands will register a Transfer without first sighting the express instructions of ‘Joint Tenants’ or ‘Tenants in Common’.
Don’t know if your home is owned as Joint Tenants or Tenants in Common? Contact Prime Lawyers and we will advise you. We can also assist in changing ownership from Joint Tenants to Tenants in Common and vice versa.