Joint Tenants or Tenants in Common – what is the difference
Joint Tenants or Tenants in Common is a widely misunderstood concept and is often confusing to buyers when they are deciding on which of these options best suits their needs.
Understanding the difference between Joint Tenants and Tenants in Common is extremely important considering the legal implications that can arise with either option.
Let’s look at the differences…
The first question is, how much interest does each buyer intend to hold on the property? For example – does one buyer intend to hold 100%; each buyer 50%; or different shares such as 80/20. Another thing to consider is in the event that any of the co-owners pass away, what do the other parties intend to happen? Do they intend for the deceased’s share in the property to be automatically transferred to the surviving parties?
A joint Tenant is a common option for married or de-facto couples. It allows two or more persons to own property jointly as one single owner.
A joint tenancy means that if one of the owners pass away, their interest in the property will automatically transfer to the other owners.
Tenants in Common
Tenants in Common allows two or more individuals to own shares or a fraction of interest in the property. Each owner will need to specify what percentages they will hold of the property. For example, they could own equal shares of 50% and 50% or unequal shares of 80% and 20%. For more than two owners, the shares could be split as 50%, 30% and 20% for example or any other percentages totaling 100%.
The effect of Tenants in Common is that if one of the owners passes away, their share will not automatically transfer to the surviving owners, but must be dealt with under the owner’s will. This is a better option for an owner if they prefer their share to be transferred to another family member for example rather than being transferred to the co-owners of the property.
For more information on Joint Tenants and Tenants in Common contact us.