Joint Tenants vs Tenants in Common – What’s the difference?

Joint Tenants vs Tenants in Common – What’s the difference?

Here’s a quick video on the difference between Joint Tenants and Tenants in Common. When two or more people buy property together
you’ll be asked how you want to hold that property by your lawyer. And so there’s two options, you either hold
as ‘joint tenants’ or as ‘tenants in common’. These are funny phrases, joint tenants, tenants
in common, but those are the two options. So, what’s the difference? The key difference is what happens if one
of the owners dies. If you hold as joint tenants all of the co-owners
own the property together and they have an equal share in the property, and if one co-owner
dies the others automatically become the owner of that property, regardless of what it says
in your Will. The property will simply pass to the surviving
joint tenant, or the surviving joint tenants. In Queensland, not even a person who contests
a Will, via family provision application, trying to get a greater share of the estate,
can challenge this automatic transfer of property to the surviving joint tenant. So, as you might imagine, most married couples
hold as joint tenants, because they’re quite happy for their share to pass automatically
to the other person. On the other hand we have tenants in common. This is where each co-owner has a distinct
share in the property. They can have different shares, they need
not be equal, like with joint tenants. They might be 50/50, or they might be 60/40,
or 30/70, whatever the co-owners choose, and of course, if there’s more than two that’s fine, we can
have 10, 30 and 60, for example. And so, where the co-owners own as tenants
in common their distinct share can be left via their Will. So, with tenants in common, this is a common
way for business partners or siblings or friends to hold property, so that they can give their
own share onward to their own chosen beneficiaries, for example, their family. Can the type of tenancy be changed? The short answer is ‘Yes’, it can be, but
it certain pays to get it right the first time. A change from ‘joint tenants’ to ‘tenants
in common’ is very common right after a couple may have split up because they no longer want
their share automatically going to the other person So, they want to change that joint tenancy
to a tenancy in common, so that they can leave their own share onward via their Will. This change from ‘joint tenancy’ to ‘tenancy
in common’ can be done either by both parties, or all parties, if they agree or by just one
of the parties. You don’t need everyone to agree, to go from
‘joint tenancy’ to ‘tenancy in common’. Often it’s called severing the joint tenancy. It’s a bit of a funny way of describing it,
but that’s the legal language, ‘severance’ or ‘severing’ the joint tenancy. You can also go the other way, from a ‘tenancy
in common’ to ‘joint tenants’. However, to do this, all co-owners would need
to agree and the joint tenants would all need to have an equal share. So, if it’s not already equal, that could
be a problem and would need to prompt transfers of property, which could have duty and tax
consequences. So, in short, to wrap up, the key difference
between ‘joint tenants’ and ‘tenants in common’ is what happens if one of the co-owners dies. In one case, joint tenants, it automatically
goes to the other co-owner or co-owners, whereas with tenancy in common, you get a choice. It forms part of your estate and you can leave
it via your Will. I hope that was helpful.

One thought on “Joint Tenants vs Tenants in Common – What’s the difference?

  1. The Tenant in Common Exchange (ticX) is a trading platform for tenant in common interests in real estate where each property is available for shared ownership or a single buyer. 
    These days, not everybody wants to, needs to, or can even afford to, buy a property outright on their own. Buyers have always been able to purchase a property as tenants in common. However, ticX Members are in the unique position of being able to OFFER any property to multiple buyers. In order to legally offer any property to multiple buyers you first need to understand the five (5) rules of ticX.

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