Joint Tenants v Tenants in Common


When purchasers enter into a contract to purchase a property and there are two or more of them (including two or more companies), they need to decide how the property is to be held.

They have two options. These are to purchase as Joint Tenants or Tenants in Common. This is needed to be specified on the front page of the contract.

If a property is owned as Joint Tenants it means that:

  • For all intents and purposes (although not strictly from a legal perspective) it is owned in equal shares; and
  • If one of the owners dies, then their share automatically passes to the surviving owners (even if they have a Will that gives their estate to someone else – the Will cannot override a joint tenancy)

This type of ownership is most popular with people in first marriages or their first long-term de facto relationships. It is appropriate where it is the wish of the joint owners that if one of them dies, that their share in the property goes to the other joint owner.

If a property is owned as Tenants in Common it means that:

  • The purchasers can choose to own the property in equal shares, or unequally. For instance, if one has contributed more to the property than the other, the shares could be held as, 1/3 and 2/3 or where a person, for asset protection purposes, wishes to only have a small interest (say 1/100) in the property; and
  • If one of the owners dies, each owner is able to stipulate in their Will who gets the ownership of their share (it will not automatically go to the other co-owners as it would if held as joint tenants)

This way of owning a property is popular with owners who want different shares of ownership or don’t want their share to necessarily go to the other owners. For instance, if you they are buying into a property with a group of friends, or with a business partner, etc.

If the purchasers are in a second marriage or have children from a previous relationship then Joint Tenants is possibly not the best option for them.

If you are involved in the exchange of contracts, or have any clients looking to purchase, you should let the purchasers know that they should seek legal (and possibly accounting) advice as to how the property is to be held, prior to the exchange occurring. If they get this wrong at the time of exchange, it may result in additional expenses being incurred to correct this. There are also significant different legal consequences from the different forms of joint ownership.

For further information, contact our Property & Conveyancing Team.