Show
When purchasing property in NSW with two or more persons, it is essential to consider how you will own the property together and in what proportions. The two options when purchasing property with others are to purchase as either joint tenants or tenants in common. Joint tenants vs tenants in commonJoint tenantsIf the owners of the property are joint tenants, then they jointly own the property. If any of the joint owners dies, then the ownership of the property would pass to the survivor(s) automatically. The deceased's interest in the property would not be dealt with under the terms of their Will. Tenants in commonIf the owners of the property are tenants in common, then they would each own a share in the property. The share that is owned by each of the owners can be equal (ie 50/50) or unequal in whatever proportions are selected. If any of the owners dies, then their share of the property would be dealt with under their Will (it would not pass automatically to the other owners of the property). Why choose joint tenants?Purchasing as joint tenants is the most common option for married couples or couples in a long term de-facto relationship. The process of transferring the property to the surviving joint tenant is much less costly and much faster than the process of transferring the interest in the property under a Will. If one of the joint tenants dies, then a Notice of Death would need to be registered with the Land Registry Services to move the property into the name of the survivor. A Grant of Probate would not be required to transfer the property to the survivor. Why choose tenants in common?Purchasing as tenants in common is often more appropriate under, for example, the following circumstances.
When do I need to decide?It is best to decide before exchanging contracts for the purchase as this is recorded in the Contract for Sale. There can also be some stamp duty implications if the proportions that will be noted on title are changed between exchange of contracts and settlement. Can I change the way the property is owned, after purchasing?It is possible to change between tenants in common in equal shares (ie 50/50) and joint tenants after purchasing, by registering on title either:
Transfers that change the ownership proportions will incur stamp duty, calculated on the market value of the proportion being transferred. In summaryWhenever purchasing a property with other persons, taking the time to work out how you will be purchasing together, and the impact that it has on your Will and estate plan, can save you time and cost later on. Our property and conveyancing team can advise you on the pros and cons of each option, specific to your circumstances. Contacting E&A LawyersFor more information or to arrange a consultation with a lawyer, you can call or email us. 📞 02 9997 2111 📧 Find this blog useful or interesting?You may also like to read: Download as PDF
This article is of a general nature and should not be relied upon as legal advice. If you require further information, advice or assistance for your specific circumstances, please contact E&A Lawyers. Previous Blog Next Blog The two most common forms of joint ownership of property is for property to be held either as ‘tenants in common’ or ‘joint tenants’ (the type of holding is sometimes referred to as tenure). The way that you hold joint property will determine how your interest in the property will be dealt with when you pass away and it is important that the tenure reflects your intentions. Tenants in common Tenants in common is a holding type where two or more parties can co-own a property in defined shares that they can dispose of as they desire. The ownership share can be in any proportion (i.e. it does not have to be an equal interest). A tenant in common can give his or her interest in the property by will as there is no right to survivorship. This type of ownership is popular with owners who do not necessarily want their share to automatically pass to the surviving owner(s). It is important to understand that the surviving co-owner(s) may become co-owners with a person(s) they did not originally intend to own the property with. Joint tenancy Where parties hold property as joint tenants, all joint tenants have an equal interest in the property and the right of survivorship exists. The right of survivorship provides that if one of the joint tenants dies, then the property will automatically pass to the surviving joint tenant(s), it will not form part of the deceased person’s estate and be distributed in accordance with his or her will (unless the deceased person is the last surviving joint tenant). CASE STUDY 1 – Desire to benefit children Jason and Martha are in a de facto relationship. Each have one child from a previous relationship. Jason and Martha made the decision that upon the death of each of them, the deceased’s child will receive the whole of the deceased’s estate, including any interest in properties they own. In order for this to be achieved, it will be necessary for them to hold their respective interests as tenants in common so that interest will form part of their estate to be distributed pursuant to the terms of their will. If Jason and Martha held the property as joint tenants, then on the death of one of them, their interest would pass to the surviving joint tenant and then be dealt with by the terms of the survivor’s will. This may mean that their intended beneficiary does not receive their interest. CASE STUDY 2 – Asset protection Jason and Martha are married and have two young children and own a property in equal shares. Martha has an adult child from a previous relationship who has a gambling problem and from whom she is estranged. Martha wants to ensure that if something happens to her that her husband and young children can continue to live in the property. Martha is concerned that on her death her adult child will make a claim against the estate and she wants to protect the property. If Martha and Jason own the property as tenants in common, then Martha’s interest in the property will form part of her estate and be open to a claim. However, if Martha and Jason own the property as joint tenants then on Martha’s death, the right of survivorship will apply and the property will pass to Jason as the surviving joint tenant. The property will not form part of her estate. (Note: If the property is in New South Wales, a New South Wales court may still treat the property as if it were held as tenants in common). Changing of tenure You can change how a property is held from tenants in common to joint tenants and vice versa. The most common example of this is severing a joint tenancy in favour of a tenancy in common. However, before you change the ownership of your property, it is important you receive advice as the change of ownership may result in transfer duty and/ or other taxation implications (especially if there is a change in the value of each co-owner’s interest in the property). Matters to be aware of There is no ‘one size fits all’ approach when it comes to determining the tenure of a property. It is dependent on your individual circumstances and what outcomes you are seeking to achieve. We recommend that you consult with us so we can develop a tailored estate plan that fits your particular needs. By: Emma Nisbet and Melanie Rego
Last updated 18 March 2022 When two or more persons are buying property together, they must decide whether to hold the property as joint tenants or tenants in common. Joint tenancy is a method of owning property that allows all tenants to have their names on the title as co-owners. The effect of joint tenancy is that upon the death of one of the joint tenants, their share goes automatically to the other joint tenant by a legal process known as survivorship. This rule of survivorship will apply regardless of what the deceased says in their will. Problems can arise where one or more joint tenants wish to sell their interest but the others do not. In such a case, it may be necessary to make an application to the court under the Property Law Act 1974 (Qld) to have an order for partition made so that a sale can proceed. For these reasons, joint tenancy is most suitable for a couple that intend to live permanently together and who want the property to go automatically to their partner upon death. Tenants in common own property in individual shares, with the title being in the names of all of those buying the land. Usually, the tenants in common will be those who have provided the purchase monies. Traditionally, each person has a fractional share in the land in proportion to the amount of money they have provided towards the purchase price. If property is owned by tenants in common, on the death of one of the tenants in common, the deceased person’s fractional share is distributed according to their will. If there is no will, the fractional share is distributed according to the rules that apply upon intestacy (see chapter on Wills and Estates). PREVIOUS, NEXT, |
When do I need joint tenancy?
Postagens relacionadas
direito autoral © 2024 estudarpara Inc.
