Joint Tenants or Tenants in Common? Reliable

Joint Tenants or Tenants in Common – what is the difference and why is it so important to get it right?

When a property is purchased by two or more people, the owners can hold their interest in the property in one of two ways – as joint tenants or as tenants in common. It is imperative a person ensures they select the correct ownership type for their circumstances due to the legal and financial repercussions of each joint ownership type.

Joint Tenancy

If owners hold a share of a property as joint tenants, the shares of the property are owned jointly between those owners. If an owner dies whilst holding the property with another joint tenant, the surviving owner(s) automatically becomes the owner of the deceased’s share in the property, regardless of what may or may not be in the deceased’s Will. 

Tenancy in Common  

Tenants in common is where each owner has a separate interest in the land and could own that interest in a different proportion to the other owner. With tenants in common, each proprietor can own equal (50/50) or unequal shares (eg. 90/10) in a property.

Some people elect to hold the property in certain percentages as tenants in common as there can be tax advantages for investments. A further benefit of owning property as tenants in common is the ability to minimise the financial risk of one of the owners.

When a person dies holding property as tenants in common, that share does not necessarily transfer to the surviving owner(s). The share will revert to the deceased’s Estate where it is distributed in accordance with the Will of the deceased, or the rules of intestacy, if the person dies without a Will.

A disadvantage of holding the shares as tenants in common is if you are concerned that your Estate may be challenged by an aggrieved person by way of a Family Provision Application, then that share of the property may well be at risk of falling into challenged property and not ending up in the hands of the intended beneficiary. If the intended beneficiary is the other owner of the property, then you may wish to consider having the property held as joint tenants, rather than tenants in common, to avoid the property becoming ‘challenged property’ in the event a Family Provision Application is lodged against the Estate.

Seek legal advice

One of the main differences between the two types of shared ownership is what happens to the property when one of the owners dies.

Decisions relating to property can have financial and legal consequences. Before deciding what ownership type for the property you wish to purchase, it is important to seek professional advice. If you have any questions or concerns about the holding of your current property or intended purchase, please contact Chloe Houghton to discuss your concerns and to learn how we can help you better protect your financial future.



Back to Articles