A lot of people don’t consider the division of ownership when purchasing property with someone else. They just assume that each party owns an equal share. Or, a share of the property based on the percentage of costs each person has paid. But before the Transfer is prepared, you must consider if you register as Joint Tenants or Tenants in Common.
So what does Joint Tenants or Tenants in Common mean?
Owning as Joint Tenants is more common, and is the usual arrangement in place between married couples or long-term partners. As Joint Tenants, the surviving partner takes full ownership of the property if something happens to the other.
As Tenants in Common, each owners share goes to their Estate and is distributed according to their Will. Each party can own a different share and can stipulate what happens to their share in their Will.
That’s the basics. But there’s more you NEED to know.
If you’ve read this far, we can say with a reasonable degree of confidence that you need to be talking to a Conveyancer now. Even if you’re not ready to engage a Conveyancer yet, we’ll be happy to share our knowledge on the 2 options with you. If you are unsure when to engage a Conveyancer, have a read of this blog.
The next bit to consider is your Will. A Will is a seriously good idea for any adult, and especially adults who own property. But, for Tenants in Common, it’s an absolute MUST, and it needs to be current. You’ll need to update it regularly and most likely you’ll need a Solicitor to handle the paperwork.
Are they mutually exclusive?
Not at all. The two options can be used together under certain circumstances. For example, two couples who purchase property together would do well to consider an arrangement where each couple exists as their own entity as Tenants in Common. However the individuals of the couple may own the property as Joint Tenants.
If something happens to one of the partners in couple 1, the Joint Tenants arrangement means that the remaining partner takes ownership of 100% of their share. The arrangement between the two Tenants in Common (the two couples) doesn’t change and the arrangement between both parties of couple 2 won’t change either.
When it comes to Joint Tenants or Tenants in Common, there’s a whole heap more you need to know. Whatever you do, don’t put it off due to its perceived complexity. The complexity involved is what makes it work, and effective, and with the right Conveyancer on board, that complexity is no problem at all. It is also a great idea to discuss the matter with your Accountant or Financial Advisor, especially if you are purchasing the property for investment reasons.
If you’d like to talk to us about anything related to Joint Tenants or Tenants in Common, contact us here.