Jointly owned property – Tenancy in Common and Joint Tenancy

In Australia, co-owners of real property (land or real estate) occurs where two or more people are jointly registered proprietors of the property. You will either be known as a joint tenant or as tenants in common.

Tenant in Common

• When parties own property as tenants in common this means that two or more people co-own the property in defined shares for example 50% each or non-equal shares where one person may hold 70% while the other person holds 30% of the property.
• When the property is owned as tenants in common this is defined by having no right of survivorship. This means that if one co-owner dies, their interest in the property will not automatically transfer to the other co-owners. The Will of the deceased co-owner dictates where the interest in the property goes.
• As a tenant in common you have the right to sell your fixed share/interest in the property. The new owner will also own the property as tenant in common.

Joint Tenancy

• Joint Tenancy is a form of co-ownership, where each party has an undivided and equal interest in the whole property. This type of ownership is particularly suitable for married couples or de-facto couples.

Some key features of a Joint Tenancy ownership include:

• One of the most significant benefits of Joint Tenancy is the Right of Survivorship. This means that if one of the co-owners passes away, their share/interest in the property automatically transfers to the remaining co-owner and does not form part of the estate. However, a Notice of Death must be lodged with the NSW Land Registry Service to remove the deceased name and ownership from the property title deeds. The remainer owner of the property now becomes the sole owner of the property.
• Each co-owner has an equal share/interest in the property ie; they would each own a 50% share.

When the Co-ownership breaks down

Where the co-ownership of the property has broken down, the Court may end the co-ownership by ordering the sale of the property. The Conveyancing Act 1919 (NSW) has the authority to grant power for any co-owner to apply to the Court to make application to end the co-ownership. In this case each co-owner is entitled to their share of the proceeds of the sale.

The Court determines the rightful share of each co-owner according to their interest in the property as a tenant in common. The Court may also adjust the proportion according to any rights each co-owner has against each other, for example:

• Reimbursement for contributions made to improve the value of the property
• Claims against any rent or profit arising from the property collected by another co-owner
• Occupation fees owed by other co-owners arising by way of an agreement or unlawful exclusion.

Choosing the right Ownership Structure.

Deciding between Joint Tenancy and Tenancy in Common largely depends on the co-owners objectives and preferences. Joint Tenancy is often chosen by spouses and de-facto partners, where Tenancy in Common is preferred when co-owners have unequal financial contributions to the property or want to have more control over their share upon their death.

Tenancy in Common also can be more appropriate in the case of blended families and business partners.

The contents of this article are general in nature. For advice specific to your circumstances, please contact your legal practitioner.

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