Joint tenancy vs tenancy in common

Mij Michael, 29 Nov 2021

Property ownership in Australia can be described in two ways:

  1. Joint tenancy 
  2. Tenancy in a common agreement.

Both descriptions mean that you end up owning a share of the property. Each structure has different consequences, depending on which agreement you choose.

Joint tenancy

This is the more common agreement, and means that you and your partner own the entire property “jointly” (together) equally. The interests of one party are not separate or distinct from the other. It doesn’t matter who contributed most of the deposit or the mortgage.  

It also means that when one partner dies, the surviving partner:

  • Automatically receives ownership of the entire property
  • Incurs full responsibility for the outstanding debt.

Joint tenancy is all about equality, so lenders treat the partners as one entity or one mortgagee. This also means that you will not be able to leave your share in a jointly owned property to your beneficiaries.

Tenancy in common

This is when each partner owns a separate and distinct individual share in the property.  The shares could be 50/50 or 70/30 or any combination, provided they add up to 100% ownership. So when one partner dies, their share of the property is determined by their will. Be sure to update your will. 

If you separate from your partner, you maintain your share of the property and the family court will take your asset into account as part of the “joint asset pool”.

The banks however see tenancy in common as a shared responsibility, so if one person defaults, then the other will need to make up the repayments.

People often choose tenancy in common where there are children from a first marriage, or when they want to split the tax-deductible part of mortgage payments, between the higher and lower-income spouses.

Which option is right for you?

Take the time to find out which tenancy is best for your real estate property. The best time to decide how you are going to own your property is when it is purchased. You will need to instruct your solicitor or conveyancer, as most automatically assume its joint tenants.

If you’re unsure which structure is right for you, then seek legal advice.

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