When two or more people decide to purchase a home together it is important that they consider how to take title to the property. The manner in which title is taken can affect their rights now and in the future.

In NSW there are two types of tenancy, joint tenants and tenants in common, and there are legal and practical differences between the two.

Joint tenancy

Commonly used by married or defacto couples, joint tenancy is where both parties own the property equally. If one of the owners dies, the other owner automatically gets the deceased owner’s share of the property. It is important to note that a joint tenant cannot leave their share of the property to anyone else in their will, as a will does not override a joint tenancy. A joint tenant can sever the tenancy (by filling out a Unilateral Severance of Joint Tenancy form and lodging it for registration) and change the ownership to tenants in common. This can be done without the other owner’s consent; however the other owner will be given notice.

Tenants in common

Tenants in common are more suitable in situations where the buyers are friends or relatives or business partners and where the owners do not want their share to automatically go to the other owners. Tenants in common can own the property in equal shares or unequally, and is often held in shares comparable to the amount that has been contributed towards the property.

For example if two people buy a property and Buyer 1 pays two-thirds of the purchase price and Buyer 2 pays one-third, they could own the property: A as to 2/3 share and B as to 1/3 share.

A tenant in common can leave their share in the property to anyone they wish. However this needs to be done via a will, therefore it is important that all tenants in common have a valid and current will. A tenant in common has the right to sell, mortgage or lease their share of the property without the agreement of the other owners. In situations where owners cannot agree between themselves, an owner can apply to the Supreme Court for an order to sell the property.

If you are unsure as to whether your property is held as joint tenants or tenants in common, a title search will confirm the tenancy in which the land is held. Fees are payable for title searches and this can be carried out by yourself online on the Property and Information website (www.lpi.nsw.gov.au) or see your solicitor.

This article is general information only and should not be relied on without obtaining further specific information.

Author: Michaela Schmidt