Joint tenants
all have an equal interest in the property with no party having a specific
share. The advantage of joint tenants is simplicity. Where one party dies, the
whole of the land automatically passes into the ownership of the surviving
joint tenant. The surviving tenant does not need probate of a Will to transfer
the title. However, there are also potential disadvantages of being a joint
tenant. The surviving party may lose an income tax advantage when obtaining the
deceased party’s share of the property which they may have been entitled to previously.
Additionally, the deceased party has no control over what the surviving party
does with the property and is unable to pass on any of their property rights. A
property owned as joint tenants does not form part of an estate and is not
dealt with by a Will.
Alternatively, parties may own property as tenants in common in equal or
unequal shares, depending on the contributions of the respective parties
towards the purchase of the property. The main advantage of being tenants in common is that in the
event of death a party can pass on their property rights pursuant to their will
with respect to the share they hold. Another advantage is co-owners can take
out separate loans to cover individual parts of the property, rather than a
single mortgage which a co-owner may become solely responsible for if a party dies.
Where
parties make unequal contributions to the property as tenants in common, it is a
frequent request that a co-ownership agreement be prepared and executed to
determine the dealing of the property in the event it is sold, particularly
where there is a relationship breakdown. This agreement will not be binding or
enforceable in the absence of a Financial Agreement complying with the Family Law Act 1975 (Cth). It is merely
an indication of the intent of the parties and the Family Court retains jurisdiction
in how the property will be divided if the property is owned by a married or
defacto couple.
Generally,
it is common for married or de facto couples to own property as joint tenants. A
joint tenancy can be easily converted into a tenancy in common if the parties
agree to amend their interests for ownership in the property. In cases where
there are children from previous relationships, owning property as tenants in
common may be more suitable. This is because children may benefit from the
property as part of the deceased’s estate.
