Joint Tenants vs. Tenants in Common – What is the Difference?
Purchasing property is a significant investment. Deciding how to structure the ownership of your property is an important process. Under the Real Property Act 1886 (SA), when land is transferred to more than one party, it can be registered with the Lands Titles Office as being owned as Joint Tenants or Tenants in Common. At Johnston Withers, we are committed to helping you make the right decision.
As joint tenants, each tenant (or owner) has an identical, undivided share in the property. All joint tenants have the same rights.
Joint tenancy is a common form of ownership with couples. This is because of a principle known as the Right of Survivorship. As joint tenants, in the event that one of the owners dies, the deceased owner’s share of the property is transferred to the surviving owner. The deceased owner’s share of the property does not form part of his or her estate. It is the responsibility of the surviving owner to register the death of the deceased owner on the land title.
Even though the deceased owner’s share is transferred to the surviving owner, it is recommended that you still seek advice about the wording of your will as your will should include provisions in case both or all joint tenants die simultaneously.
Tenants in Common
Tenancy in common is a more flexible form of property ownership which allows two or more persons to have a defined share in a property. These persons can agree to own the property in equal or unequal shares with differing interests, rights and obligations. This allows persons to hold property in unequal shares if there is a different amount of capital being contributed by each person.
Perhaps the biggest distinction is that owners who hold property as tenants in common do not have the Right of Survivorship. If one of the owners dies, the deceased owner’s interest in the property forms part of their Estate. This means it does not automatically pass on to any co-owners of the properties.
Tenancy in common allows owners to transfer their ownership of the property to third parties without the consent of the other owners.
Tenancy in common can be used in blended family situations where parents have children from previous marriages to register their property as tenants in common. This way the parents can ensure that their property is dealt with according to their will.
Other things to think about when buying property
It is important that you consider your succession planning each time you buy or sell property to ensure the property will be dealt with in accordance with your wishes.
We also recommend that you consider the land tax implications before your enter into a contract to buy property. From 1 June 2020 land tax in South Australia changed with new rates and new methods of calculation. The main change to the way that land tax is calculated is that the property ownership on behalf of each person will now be aggregated. We can assist in structuring your legal ownership for land tax purposes.
Johnston Withers Lawyers: Experience You Can Trust
Johnston Withers Lawyers have experience in providing advice on property ownership, land tax and succession planning. If you’d like advice or direction from a lawyer, please contact Andrew Mitchard on (08) 8231 1110, or get in touch online.