When two or more people buy or own property together in Western Australia, they can be registered on the title either as joint tenants or tenants in common. Here we explain the differences and some case studies to show some scenarios that may apply.
The Difference Between Tenants in Common and Joint Tenants
When a Joint Tenant dies, their interest passes to the surviving Joint Tenant.
Upon the death of a tenant in common, their interest forms part of their estate.
Joint Tenants must hold property equally, while Tenants in Common can own land in uneven portions.
What does a Tenant in Common mean?
When you’re registered as a Tenant in Common, it means you can choose who your share is given to upon your death. You can also own land in uneven shares as a Tenant in Common.
The Certificate of Title will show in what proportion and how you hold the shares in the property. Here is an example of how two people holding an equal share as tenants in common is shown on the Certificate of Title:
JOHN SMITH IN 1/2 SHARE
MARY SMITH IN 1/2 SHARE
BOTH OF 1 ST GEORGES TERRACE PERTH WA 6000
AS TENANTS IN COMMON
Tenants in Common can also hold uneven shares which may be shown as follows:
JANE SMITH OF 2 ST GEORGES TERRACE PERTH WA 6000 IN 1/10 SHARE
MARY SMITH OF 1 ST GEORGES TERRACE PERTH WA 6000 IN 9/10 SHARE
In both of the above examples, when one of the Tenants in Common dies, their share forms part of their estate. This means that it is dealt with in accordance with their Will (if they have one) or in accordance with the Administration Act 1903 (if they died without a Will). Their legal personal representative (either an executor or administrator) will be responsible for dealing with the estate and either selling or distributing the share to a beneficiary of the estate.
CASE STUDY – TENANTS IN COMMON
John Smith and Mary Smith are siblings and own a property in equal shares as tenants in common. They decide to hold the property in this way so that upon their death, their share is given to their beneficiaries (rather than to each other as would be the case if they held the property as joint tenants). They each make a will that gives their share in the property to their respective children. John dies and the executor of his estate applies for a Grant of Probate (which gives them the authority to act for the estate and distribute the assets). John’s ½ share in the property is transferred to his children, Amanda and Lee by way of Transmission Application. After the application is registered, the title shows:
AMANDA SMITH IN 1/4 SHARE
LEE SMITH IN 1/4 SHARE
MARY SMITH IN 2/4 SHARE
AS TENANTS IN COMMON
Mary is now registered with John’s children as tenants in common. Mary’s share has not changed, however it is now represented as 2/4 instead of 1/2 due to John’s half being divided into two for his children.
Normally, owners will choose to hold property as Tenants in Common if they wish to leave their share in the property to a person of their choice.
Can a Tenant In Common buy the other shares?
Yes, a Tenant in Common may purchase the shares of one or more of the other registered Tenants in Common. All parties must agree to any conditions of the sale including whether there will be a sale price or if the sale is completed without payment.
If in the above Case Study, John’s children wish to sell their shares to Mary, they will need to agree to the conditions of the sale or transfer and appoint a settlement agent to complete the transfer. A settlement will take place and Mary will pay Amanda and Lee in exchange for the transfer of their shares into her name. The end result will be Mary Smith registered as sole proprietor.
What does a Joint Tenant Mean?
A Joint Tenant is a form of property ownership which allows the property to be pass to the surviving Joint Tenant/s upon the death of another. Each Joint Tenant must hold an equal interest in a property and on the title it may be shown as follows:
BOTH OF 1 ST GEORGES TERRACE PERTH WA 6000
AS JOINT TENANTS
Upon the death of a Joint Tenant, the surviving Joint Tenant becomes the proprietor of the land by way of Survivorship Application to Landgate.
Many couples in committed relationships choose to hold land as Joint Tenants.
Changing Joint Tenants and Tenants in Common
If your circumstances have changed, you can change the tenancy on your title between Joint Tenants and Tenants in Common. This is done by Transfer of Land which is subject to assessment of Transfer Duty (formerly known as Stamp Duty) and then lodged at Landgate.
We’re not able to give tax or financial advice, but the ATO website has some information here that may be useful. We also recommend that you seek independent tax or financial advice from a qualified professional if you require it.
How Do I Know If I’m a Joint Tenant or Tenant In Common?
It’s important that you know whether you are registered as a Joint Tenant or Tenant in Common. If you own property and you’re not sure if you hold it as a Joint Tenant or Tenant in Common, you should search the Certificate of Title. You can do this directly through Landgate or contact us to search the register for you.
CASE STUDY – JOINT TENANTS AFTER SEPARATION
Jim and Sally bought property together after their marriage and registered as Joint Tenants, with the understanding that the property would pass to the survivor if one of them died. Years later, they decide to separate. They both decide to make new wills with the intention that their property is dealt with in accordance with their will, however they don’t update the tenancy on their title (and they didn’t receive any prompts from their lawyer to check this!). Sally dies as a joint tenant and Jim applies to Landgate to have the property registered in his sole name. This is done simply by a Survivorship Application. If they had amended the tenancy from Joint Tenants to Tenants in Common, then Sally’s executor would have dealt with her share in accordance with her Will.
If you are a Joint Tenant with a partner, you should consider the effect of your tenancy if you separate and divorce.
How To Choose Tenants in Common or Joint Tenants
It’s a significant difference and your decision should take into account your relationship with the other owner/s and how you want your estate to be dealt with upon your death.
Some questions you may wish to consider:
- How do you currently hold the property? If you don’t know, contact us to search the title.
- Do you want your share transferred to the other owner if you die?
- Do you have a valid will? Does it reflect your current intentions?
Visit our post on Property Settlement Terminology to learn more about common settlement terms.
If you wish to change the ownership on your title, contact us and we can prepare the necessary documents to best reflect your current intention and circumstances.
You can email us at email@example.com or call us on (08) 9470 6267 today.