What is the difference between Tenants in Common and Joint Tenancy?

What is the difference between Tenants in Common and Joint Tenancy?

When it comes to understanding what would be the most ideal form of home ownership, it is important to understand the key differences between tenants in common and joint tenancy. Upon choosing whether to purchase property as a  joint tenant or tenant in common, there are many different legal and financial impacts which both bring about which include:

  1. Share in the property 
  2. Right of Survivorship  
  3. Ending a tenancy 
  4. Typical tenants for each type of co-ownership arrangement 
  1. Share in the property

Joint tenants 

  • Amongst the registered proprietors, in which there can be more than two, there is equal ownership of the property 
    • For eg. if there are 2 registered proprietors, their share would be 50/50

Tenancy in common 

  • The registered proprietors, which is generally 2 or more as well, will own a share in the property 
  • This share is does not have to be equal – it can also be unequal as long as the shares add up to 100% ownership 
    • For eg. this could be a combination of 60,40 or 99/1 
  1. Right of survivorship 

Joint tenants 

  • The right of survivorship exists as a joint tenant 
    • This means that if one proprietor dies, the surviving joint proprietor will have the property passed onto them
    • The property will be automatically be transferred to the surviving proprietor/proprietors even if the deceased’s will or estate plan states otherwise 

Tenancy in common 

  • There is no right of survivorship 
    • In the instance that one of the proprietors becomes deceased, their share can be sold in their will if they wish and the decision in their will will prevail. 
  1. Ending a tenancy 

Joint tenants 

  • Tenancy can come to an end if :
    • Property is sold to a third party 
    • One joint 1 tenant transfers their interest to the other joint tenant 2- allowing joint tenant 2 to own the property in full 
  • Note that all co-owners must act together to preserve their joint tenancy 
  • Generally, transfers are done by filling out relevant forms which are required by government bodies 

Tenancy in common 

  • Tenancy comes to an end in when:
    • A tenant sells their share at their own will to whoever they please as all co-tenants act independent from each other- this can be restricted as co tenants may have made agreements where the co-tenant can buy out the co-tenant’s share before it is sold to someone else
  1. Typical tenants for each type of co-ownership arrangement

Joint tenants

  • Commonly used by but is not restricted to:
    • Individuals involved in long term relationships such as:
      • Married couples
      • Long term de facto partners 

Tenancy in common 

  • Commonly used by but it not restricted to:
    • Any circumstance where you do not want your share in the property to go to the other owner/owners of the property such as:
      • People buying property with friends or business partners 
      • People buying property with siblings 
      • People who have children from previous relationships

In Summary 

Sharing ownership of a property is one big step to take. Knowing the difference between joint tenants and tenancy in common – the two ways of co-owning a property- is highly significant as truly understanding the different legal and financial impacts that both types of agreements create will assist in preventing problems in the future.

Are you looking to co-own a property and do you need further assistance in deciding what the best form of ownership is for you? Get in touch with our property lawyers at 1300 337 997. 

About Liv Chum

Liv is one of OpenLegal's paralegals. Liv is a passionate student of the law, with a real interest in the way that business and legal requirements intersect.