Joint Tenants or Tenants in Common, What’s The Difference?

When there is more than one purchaser, whether it is a married couple, siblings, or friends, it is very important to ensure that the type of ownership structure that you have is the right one.  

Multiple owners can hold the property jointly or as tenants in common.  Below we set out the differences between the two.

Joint tenancy:

Joint tenancy is a form of co-ownership in which the following principles apply:

(a) There are no shares. In theory each joint tenant has the whole of the property. No party has a specific share in the property while the joint tenancy continues. This means that the joint tenants must have equal interests in the property and are entitled equally to its rents and profits. There can be two or more joint tenants.

(b) The principle of ‘survivorship’ applies. On the death of one joint tenant the surviving joint tenant gets (or joint tenants get) the whole property automatically by operation of law, irrespective of any will made by the joint tenant who died, and irrespective of the intestacy rules. This is the principle of ‘survivorship’, which applies to joint tenancies. This gives considerable protection to a joint tenant.

It follows that property held in joint tenancy does not form part of the estate of a joint tenant who dies. This is important when deciding whether a grant of probate is needed.

A grant of probate is required if the estate contains land (except in Queensland) — but this does not include property held in joint tenancy, as it does not form part of the estate.  The property passes automatically, by operation of law, to the survivor or survivors without forming part of the estate of the first-dying. A grant of probate is therefore not required for transfer (to the other joint tenant or tenants) of property held by the deceased as a joint tenant. Further, a joint tenant cannot by her or his will deal with property held in joint tenancy, because the property goes automatically to the other joint tenant on the death of the testator.

(c) The principle of joint tenancy applies to real as well as personal property — it applies to land as well as to property like cars, shares, furniture and bank accounts.

(d) Joint tenancy is usual in marriage where the spouses want to hold the property equally and want the principle of survivorship to apply. It is not common in other situations. It would be somewhat unusual for a partner to a domestic partnership or personal relationship or even a marriage who buys a house using only her or his own money or who has contributed much more to the purchase price than the other partner to want to register the house in joint names where the interests must be equal and the purchaser cannot deal with the property by will.

(e) It is possible for a joint tenant to sever a joint tenancy.

Tenancy in common:

Tenancy in common is a form of co-ownership in which property is held in common with others but where, in contrast with joint tenants, the share of a deceased tenant in common passes to her or his beneficiaries under her or his will or intestacy and does not automatically pass to the surviving tenant or tenants in common.

(a) Tenants in common have fixed, undivided shares in the property. Tenants in common can have equal shares (for example, two-thirds to one and one-third to the other).

(b) The share belonging to a tenant in common becomes part of the estate of that tenant in common when he or she dies; that is, a testator who is a tenant in common can leave her or his share by will or, if there is no will, the intestacy rules apply to the share that belonged to the tenant in common. (There is no principle of survivorship for tenants in common.)

(c) Tenancy in common is usual where two people purchase a property together, especially where they have contributed unequally to the purchase price: the parties can own equal or unequal shares to reflect their respective contributions, and each can deal with her or his share by will. A husband and wife who purchase a property together out of what they see as the assets of the marriage often purchase as joint tenants, but if they are in a blended family it may be more appropriate to purchase the property as tenants in common. In wills, the standard form of gift, for example of residue of the estate, to the testator’s children is to the children as tenants in common.

 When deciding the ownership structure of the property that you are buying you should also consider obtaining financial and/or tax advice.

If you have any questions please don’t hesitate to contact Alison.

The above comments are guidance only, and the legal strategy should always be approved by a qualified lawyer