Joint tenants vs Tenants in common | The Complete NSW Buyer’s Guide
If you are planning to buy a property in NSW with someone else – for example, a wife, family member or business partner – understanding the different ways to hold the property is a key factor, with long term implications.
The two primary methods are for each buyer to hold the property as ‘joint tenants‘ or as ‘tenants in common‘.
Each has its own advantages and disadvantages, and choosing the wrong option can have significant legal and financial implications – which can be difficult and costly to fix.
In this article, we guide you through these ownership structures to help you (and anyone else you are buying property with to) make an informed decision.
What does it mean to own a property as ‘joint tenants’?
Joint tenancy is a form of co-ownership where two or more people hold equal shares in a property.
The defining feature of joint tenancy is the right of survivorship. This means that if one joint tenant dies, their share automatically passes to the surviving joint tenant(s), bypassing the deceased’s will or estate.
For example, if John and Stephanie buy a property as joint tenants and John passes away, his share in the property will automatically be transferred to Stephanie (regardless of what John’s Will says).
There are many advantages and disadvantages to owning a property as joint tenants. These are set out in the below table.
| Advantages | Disadvantages |
| Simplicity in transfer: Upon the death of a joint tenant, the property automatically transfers to the surviving owner(s) without the need for probate, making it a straightforward process | Automatic transfer: The automatic transfer of ownership upon death may not align with the deceased’s wishes if they intended to leave their share to someone else |
| Avoidance of probate fees: Since the property does not form part of the deceased’s estate, probate fees can be avoided | Lack of flexibility: Joint tenants cannot sell or transfer their share independently without the consent of the other joint tenant(s) |
| Equal Ownership: Each joint tenant has an equal share, which can simplify decision-making and management of the property. | Potential for disputes: Equal ownership can lead to disputes if joint tenants have differing opinions on property management or sale |
What does it mean to own a property as ‘tenants in common’?
Tenancy in common allows two or more people to own a property together, but with distinct shares that may be unequal.
Each tenant in common can sell or transfer their share independently, and there is no right of survivorship.
Again, there are many advantages and disadvantages to owning a property as tenants in common. These are set out in the below table.
| Advantages | Disadvantages |
| Flexibility in ownership: Owners can hold unequal shares, allowing for more tailored ownership arrangements based on individual contributions or agreements | Probate requirement: Upon the death of a tenant in common, their share becomes part of their estate and must go through probate, which can be time-consuming and costly |
| Independent control: Each owner can sell, transfer, or bequeath their share independently, providing greater control over their portion of the property | Potential for conflict: Different ownership shares and independent control can lead to disagreements over property management or sale |
| Estate planning: Tenants in common can leave their share to beneficiaries of their choice through their will, offering more control over estate planning. | Complexity in decision-making: With potentially unequal shares, decision-making can become complex, especially if owners have differing objectives |
Which is the most common ownership structure out of these options?
From our experience, we find that most:
- couples (e.g. people that are married or in a defacto relationship) will buy property as joint tenants, and
- business partners or siblings will buy property as tenants in common.
In terms of which structure is best for you, this ultimately depends on your personal circumstances. You should speak to your lawyer and/or tax accountant as they can help guide you to make the right decision for you.
When do you need to decide which ownership structure you will be going with?
When you buy a property with someone else, you need to include both of your names on the front page of the contract for sale. Technically, you also need to specify whether you are buying the property as joint tenants or tenants in common at this time. Take a look at the next contract you see and there will be a question (right below where the buyer details are noted) asking whether the property will be owned as joint tenants or tenants in common. Note: If you do not answer this question, the law in NSW assumes you intend to own the property as joint tenants.
Ultimately (and to keep things simple), we recommend that you make a decision on your ownership structure before you sign a contract for sale. By doing this, you remove any chance of errors being made during the conveyancing process.
If, however, you decide to change your mind after a contract is signed, this is also possible as long as you convey this decision to your lawyer or conveyancer before settlement. Your lawyer can then:
- update the transfer document (which will be lodged with the New South Wales Land Registry Service at settlement) to reflect your updated instructions, and
- engage with the seller’s lawyer to have the contracts updated to reflect your updated instructions (i.e., to tick the correct box on the contract to reflect the correct ownership structure).
The implications of making the wrong choice
Choosing the wrong ownership structure can lead to unintended consequences.
For instance, opting for joint tenancy without understanding the implications of the right of survivorship might result in a share of the property passing to someone unintended. Conversely, choosing tenancy in common without considering the need for probate can lead to delays and additional costs for beneficiaries.
What does this all mean for you?
Deciding between joint tenancy and tenancy in common requires careful consideration of your personal circumstances, future plans, and the potential legal and financial implications. Consulting with a legal professional can provide valuable guidance tailored to your specific needs, ensuring that your property ownership aligns with your long-term goals.
By understanding these ownership structures, you can make an informed decision that protects your interests and those of your loved ones.
Need help buying property?
If you need a lawyer to act for you in relation to the purchase of property, please check out our Buying a Property Information Centre, where you can get more information about our conveyancing services and get an instant quote.
Alternatively, you can give us a call, send us a message or book in a time for us to call you.
Table of Contents
Posted in Buying Property