Joint Tenants VS Tenants in Common
Sirpa Gunn • April 24, 2019
Who will inherit your property when you die? If it is owned as joint tenants it may not be who you intended it to go to!
Do you own a property jointly with another person? (be it a husband, wife, business partner, family member or friend) Is the property registered in your personal names as opposed to a trust or company?
If so it is vital that you understand the implications of the ownership structure and what will happen to the property on your death or the death of any co-owners. There are two options: firstly, to own the property as joint tenants; secondly as tenants in common.
1. Joint Tenants:
Where a property is owned as joint tenants all of the owners names are listed on the title in the following format: Jane Sarah Jones and Mathew John Smith. This is the most common form of ownership and banks will issue mortgage documents in this form unless you specifically request otherwise.
If one owner dies the property will pass directly into the name of the other owner(s). In this example if Jane Jones dies the property will pass directly into Mathew Smith’s name. This is all very well if they are a couple that have kids together, but families these days are not always that simple. If Jane Jones had children from a previous relationship they would miss out entirely, even if her will specified otherwise! Or if she had no children she may want her assets to go to her family (parents and siblings) rather than to her current partner as listed on the title.
Putting someones name on the title to help get a mortgage is quite a common occurrence – however few people realize the consequences . An example of this is a lady in her 70’s who wanted to purchase her dream retirement home. The house she chose cost $1,000,000 however she only had $900,000 saved and required a loan for $100,000 to complete the purchase. As she was no longer working the bank was reluctant to give her a mortgage so her eldest son kindly agreed to purchase the property jointly with her. His name went on the title, and he assisted his mother by making mortgage repayments. When she passed away, 15 years later, the entire property went directly to the eldest son. Needless to say her other four children were horrified at loosing out on their inheritance and a long nasty family feud (and legal battle) ensued.
2. Tenants in Common:
With this option the ownership of the property is divided into shares. Should one of the owners pass away, their share in the property will go to their estate and be dealt with according to their wills and?or the laws of intestacy and relationship property.
This method of ownership is usually suited to:
– business partners or friends co-purchasing a property
– couples with children from former relationships that wish to leave a share in the property to their children
– anyone going on the title to give financial assistance for mortgage purposes.
The amount each party contributes to the purchase can be reflected in the shares, so in the case of the son helping his mother he could have had a 1/10th share in the property and his mother a 9/10th share. On her death the mothers share would then be divided equally among her children, as she had no doubt intended.
Get in touch with the Conveyancing Shop Lawyers
for more advice on property ownership options including: Joint Tenants, Tenants in Common and other property ownership options .
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