Joint Tenants vs Tenants in Common QLD

When you purchase property with another person, your solicitor will ask you: Joint Tenants or Tenants in Common?

The purpose of this article is to explain the difference between these terms and how your decision can affect you in the future, particularly from an estate planning perspective.

Key Takeaways

Joint tenants each hold the same and equal interest in a property and share profits and responsibilities equally.
One key feature of joint tenancy is the survivorship rule, where a deceased owner’s share passes to the surviving joint owner or owners.
Tenants in common each hold a separate interest in the property, which can be owned in equal or unequal shares.
Owning as tenants in common can offer more flexibility for estate planning, because an owner may leave their share under their Will.
The right ownership structure depends on your circumstances, including your relationship, financial position and estate planning goals.

Joint Tenants

Joint tenancy is a concept where each owner of a property holds the exact same (and equal) interest as all of the other owners. All joint tenants are therefore entitled to an equal share of profits if the property is rented or sold. Similarly, all joint tenants are equally responsible for the costs associated with owning and maintaining the property.

For many couples, owning property as joint tenants is preferable because of its survivorship rule. This means that when a joint tenant dies, his or her share will be equally distributed between the surviving joint owners with no stamp duty being payable on the transfer. It will not form part of the estate of the deceased owner and is generally outside the scope of a family provision application (i.e. any legal action brought by relatives challenging the will of the deceased).

Tenants in Common

Tenants in common is a concept where each owner has a separate and distinct interest in the land in specific proportions. For example, a husband and wife may own a property with equal 50/100 shares, or in 1/100 and 99/100 proportions (or any other proportion).

In some instances, the benefit of owning property as tenants in common is the ability to minimise the financial risk of one of the owners. For example, a small business owner may wish to minimise the amount of assets held in his or her name (while still remaining an owner) and therefore prefer to hold a minimal portion of the property only.

In other instances, the benefit of owning property as tenants in common is that an owner can nominate whom their share of the property will be transferred to. This decision can occur whilst the owner is alive (keeping in mind that such a transfer will attract stamp duty). Alternatively, the transfer can occur after the death of the owner by leaving a bequest in their will. Generally, people who are not in a familial relationship or who receive the property as a bequest with others choose tenants in common for this purpose.

If you own or are purchasing a property and you not sure what is the best tenancy for you, please contact our office and we will be happy to discuss your options with you.

Frequently Asked Questions

What is the difference between joint tenants and tenants in common?

Joint tenants each hold the same equal interest in the property, while tenants in common hold separate interests that can be in equal or unequal proportions.

What happens to a joint tenant’s share when they die?

The article explains that under the survivorship rule, a deceased joint tenant’s share passes to the surviving joint owner or owners rather than forming part of their estate.

Does a joint tenant’s share form part of their estate?

Generally, no. The page states that because of the survivorship rule, the share does not form part of the deceased owner’s estate.

Can tenants in common own different shares in a property?

Yes. The article explains that tenants in common can hold specific proportions, such as 50/100 each or other unequal shares.

Can a tenant in common leave their share to someone in their Will?

Yes. One of the benefits of owning as tenants in common is that an owner can direct who receives their share after death through a bequest in their Will.

Why might someone choose tenants in common instead of joint tenants?

The page notes that tenants in common may be preferred where an owner wants greater estate planning flexibility or wants to minimise the financial risk associated with the amount of property held in their name.