Australia: Joint tenants or tenants in common – which one should you choose?

I often get asked "What is the difference between joint tenants and tenants in common?". It is not a simple question to answer.

Most married couples, family members and couples who have been in a relationship for many years are happy to nominate joint tenancy. However, couples who are in the early stages of a relationship, people who have no relationship at all, those who are in a blended family or where there are a number of parties to the property ownership choose tenants in common.

What is the difference between joint tenants and tenants in common?

"Joint tenants" means that the registered proprietors – and there can be more than two – own the property jointly. Should either of the registered proprietors die, then the property is automatically transferred to the surviving registered proprietor(s).

"Tenants in common" means that each registered proprietor owns a share in the property. This share could be 50/50 or 60/40 or any combination, provided that the shares add up to 100% ownership. On the death of a registered proprietor, the will of the deceased determines the outcome of the deceased's share in the property. The nomination of tenants in common may be not for personal reasons, but for taxation reasons.

Examples of property ownership scenarios

Married couple – Tom and Mary own property as joint tenants. Mary is diagnosed with an incurable disease and passes away. Tom is able to have the property transferred into his sole name by producing a copy of Mary's Death Certificate, together with a Notice of Death Form to New South Wales Land Registry Services.

Couple in new relationship – John and Margaret purchase a new home together and as their relationship is reasonably new, they purchase as tenants in common in equal shares (50/50). Some years later John is involved in a fatal car accident. The property is not automatically transferred to Margaret, instead it is transferred in accordance with the terms of John's will.

Blended family – Bob and Sue have been married for 10 years. Both have children from previous relationships. By purchasing the property as tenants in common, should either Bob or Sue die, then his or her interest in the property can be accounted for in accordance with their individual will.

Which option is the right one for you?

Take the time to find out what the tenancy is for your real estate property. Think about what you want to achieve with your share in the property should you pass away.

If you are not sure what the best option is for you, seek legal advice.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.