Buying a Property Together? Understanding Joint Tenants and Tenants in Common
Buying a home with your partner, a friend or a family member is an exciting milestone. Whether you’re purchasing your first home together, investing in property or helping a family member enter the market, there’s an important decision you’ll need to make before settlement.
How will you legally own the property together?
In Victoria, there are two main ways to register property ownership when buying with someone else: joint tenants and tenants in common.
Although they might sound similar, there are some significant differences between the two. Understanding these differences before settlement could save you considerable stress, expense and complications down the track.
What Does It Mean to Own a Property as Joint Tenants?
Joint tenancy is a common ownership arrangement, particularly among married couples and long-term partners.
When you purchase a property as joint tenants, you own the property together rather than holding separate, individually defined shares.
One of the most important features of joint tenancy is something called the right of survivorship.
This means that if one owner passes away, their interest in the property automatically passes to the surviving joint tenant or tenants.
Importantly, this happens regardless of what the deceased owner’s will might say.
An Example of Joint Tenancy
Imagine Sarah and James purchase their first home together in Melbourne.
They register the property as joint tenants.
Several years later, James sadly passes away. Because the property is held under joint tenancy, Sarah automatically becomes the sole surviving owner, subject to the appropriate registration process.
Even if James had left instructions in his will for his interest in the property to go to another family member, those instructions would not override the right of survivorship.
When Might Joint Tenancy Be Suitable?
Joint tenancy may suit couples or other buyers who want the surviving owner to automatically receive the property if one of them passes away.
However, every situation is different, particularly where blended families, previous relationships or complex estate planning arrangements are involved.
What Does It Mean to Own a Property as Tenants in Common?
Tenants in common is another way for two or more people to own property together.
The biggest difference is that each owner holds a defined share of the property.
These shares don’t necessarily have to be equal.
For example, two people could purchase a property with ownership divided:
- 50% and 50%
- 60% and 40%
- 70% and 30%
Unlike joint tenancy, tenants in common does not include an automatic right of survivorship.
Instead, when an owner passes away, their share becomes part of their estate and is distributed according to their valid will or, if there isn’t one, the applicable intestacy laws.
An Example of Tenants in Common
Imagine two siblings, Emma and Oliver, decide to purchase an investment property together.
Emma contributes a larger deposit, so they agree to register the property with Emma owning 70% and Oliver owning 30%.
If Oliver passes away, his 30% share does not automatically transfer to Emma.
Instead, it forms part of his estate and may pass to the beneficiary named in his will.
This arrangement can provide greater flexibility for buyers who want clearly defined ownership shares.
When Might Tenants in Common Be Suitable?
Tenants in common may be worth considering when:
- Friends purchase a property together.
- Family members contribute different amounts towards a deposit.
- Property investors want clearly defined ownership percentages.
- Couples have children from previous relationships.
- Buyers want their ownership share to form part of their estate.
Joint Tenants vs Tenants in Common: What’s the Difference?
Here’s a simple comparison of the two ownership arrangements.
| Feature | Joint Tenants | Tenants in Common |
|---|---|---|
| Ownership | Shared ownership without separate defined shares | Each owner has a defined share |
| Unequal shares | Not available | Yes |
| Right of survivorship | Yes | No |
| Can your will direct who inherits your interest? | Generally no, while joint tenancy remains in place | Yes |
| Commonly considered by | Couples and partners | Friends, family members and investors |
Neither option is automatically better than the other. The right arrangement depends on your circumstances, financial contributions and long-term intentions.
Five Things to Consider Before Buying Property Together
Buying property with someone else is a significant financial commitment. Before settlement, it’s worth discussing a few important matters.
1. Decide How You Want to Own the Property
Don’t automatically assume joint tenancy is the best option simply because you’re purchasing with your partner.
Consider your individual circumstances, future plans and what you would want to happen if one owner passed away.
2. Agree on Your Ownership Shares
If you’re purchasing as tenants in common, you’ll need to decide what percentage of the property each person will own.
This can be particularly important when one buyer contributes a larger deposit or makes a greater financial contribution.
3. Discuss What Happens If Circumstances Change
Nobody purchases a property expecting a disagreement or relationship breakdown.
However, circumstances can change.
What happens if one owner wants to sell and the other doesn’t? What if someone can no longer afford their share of the mortgage?
A properly prepared co-ownership agreement can help establish expectations and procedures before problems arise. Independent legal advice is recommended.
4. Review Your Wills
Your property ownership structure can affect what happens to your interest in the property when you pass away.
If you’re purchasing as tenants in common, having an up-to-date will is particularly important.
It’s worth speaking with an estate planning solicitor to ensure your arrangements reflect your wishes.
5. Speak to Your Conveyancer and Lender Early
Your ownership arrangement needs to be correctly reflected in the property transfer documentation.
Your lender should also be aware of the proposed ownership structure, particularly where ownership shares are unequal.
Discussing these details early can help prevent unnecessary complications or delays during settlement.
Can You Change Your Property Ownership Structure Later?
Yes. In many circumstances, it’s possible to change how a property is owned after settlement.
For example, owners may wish to change from joint tenants to tenants in common or vice versa.
However, making these changes can involve additional documentation, registration fees, legal costs and potentially taxation or duty implications, depending on the circumstances.
That’s why it’s generally easier to consider your options carefully before purchasing rather than making changes later.
Buying Property Together in Victoria? Simply Settle Conveyancing Can Help
Whether you’re buying your first home with your partner, purchasing an investment property with a friend or joining forces with family members, understanding your ownership options is an important part of the buying process.
At Simply Settle Conveyancing, we help Victorian property buyers navigate the conveyancing and settlement process with confidence.
From preparing and reviewing property transfer documentation to helping ensure your ownership details are correctly recorded, we’re here to make the settlement process as straightforward as possible.
Where specialist advice is needed about estate planning, co-ownership agreements or complex ownership arrangements, we can recommend obtaining appropriate independent legal advice before proceeding.
Let’s Get Your Property Purchase Off to the Right Start
Buying property together should be exciting, not confusing.
If you’re unsure about the difference between joint tenants and tenants in common, contact Simply Settle Conveyancing before settlement.
We’ll explain the conveyancing process and help you understand what needs to be considered when registering your property ownership.
Get in touch with Simply Settle Conveyancing today and take the next step towards a smoother property settlement.
Disclaimer: This article provides general information about property ownership in Victoria and does not constitute legal, financial or estate planning advice. Individual circumstances vary, and independent professional advice should be obtained before deciding on an ownership structure.