Joint Ownership of Real Property – Some Complexities
When purchasing a property with one of more other people, you are required to decide whether you will own the property as ‘joint tenants’ or ‘tenants in common’. Where there are three or more owners, it is also possible to have a combination of ‘joint tenants’ and ‘tenants in common’.
See our earlier article HERE for the difference between Joint Tenants and Tenants in Common.
Combining Joint Tenants and Tenants in Common
Where there are three or more people purchasing the property, there can be a mix of both types of ownership. For example:
· a husband and wife decide to purchase a property with the wife’s sister;
· the husband and wife contribute 70% of the purchase price and the sister contributes 30%;
· the husband and wife choose to hold the 70% share in the property as joint tenants between themselves;
· together they hold their 70% share in the property with the wife’s sister’s 30% share as tenants in common.
This would be referred to as ‘joint tenants inter se as tenants in common. In the event the husband passes away, his ownership automatically passes to the wife (by way of the joint tenancy) and she would then solely hold the 70% share in the property as tenants in common with her sister. Should the wife then pass away, her 70% share would pass in accordance with the terms of her will.
Severing a Joint Tenancy
Another key matter to consider in relation to joint tenancy, is whether a joint tenant can ever change the way they hold the property (e.g. in the event of a spousal relationship breakdown). Critically, it is possible to unilaterally (that is, by one person only) sever a joint tenancy so that the joint owners no longer hold the property as joint tenants, but instead, from the time of severance, hold the property as tenants in common. This is common and strongly recommended in the event of a relationship breakdown between spouses, a dispute between the owners, or where circumstances change and you no longer want the property passing to the other joint tenant/s in the event of your death. If it is required and/or desired, severing a joint tenancy should be done as a matter of urgency given the potentially significant consequences if an owner passes away without the severance having taken effect.
For more details or for advice in relation to your ownership of property or if you are in dispute with a co-owner, please do not hesitate to contact us to discuss your options.
Important Disclaimer: The material contained in this publication is of a general nature only and is based on the law as at the date of publication. It is not, nor is it intended to be, legal advice. If you wish to take any action based on the content of this publication, we recommend that you seek professional advice.