By Remy Forster
Once you have bought a property in Queensland, your name (along with the names of the other buyers) will be listed on the title to that property. When you purchase a property with two or more buyers, you have two options for how your names can be listed on the property title – either as “Joint Tenants” or as “Tenants in Common.” What many buyers don’t consider prior to their purchase is which of these options is better for them.
“Joint Tenants” is a legal way of saying that all the people on the title own the property together. In other words, one person’s part of the property cannot be separated from the rest of the property. One result of owning a property as Joint Tenants, is that if one of the people on the title passes away, their name is simply removed from the title to the property; the property title itself remains whole, just with less owners. This option is more common between married or de facto couples, as the surviving spouse will receive their partner’s portion of the property.
In contrast, by owning property as “Tenants in Common”, buyers are able to assign shares of the title to the property as they wish. This is essentially the property version of cutting different sized pieces of a pie – you can decide how big each piece of the pie should be, and how many pieces you want. For example, four buyers can own a property as Tenants in Common with equal shares (25% each), or three buyers can own the property with one person owning 70% and the other two each owning 15% respectively. Another option, which is particularly popular for taxation purposes, is for one person to own a 99% interest in the property, and for the other to own a 1% interest in the property.
The other main difference in holding property as Tenants in Common, is that should one of the property owners pass away, their share in the property is distributed according to their will, rather than it automatically passing to the surviving owners of the property. It is most common for this option to be used for investment properties, or between parties who have purchased the property due to a business relationship.
Which ownership option is the best for you will depend on your personal circumstances, such as who you are purchasing the property with, the intended purpose for the property, how much money the buyers are each contributing to the property, and whether the buyers have current and valid wills. We would also recommend that you consult with your accountant and financial advisor to determine the benefits of each option prior to signing a contract of sale to buy the property.