When purchasing property with another person in New South Wales, you’ll need to decide how you want to legally share ownership. The two most common options are joint tenancy and tenants in common. While they may sound similar, they have very different legal and financial consequences, especially when it comes to inheritance, sale, or dispute resolution.
Let’s break down the key differences between joint tenancy and tenants in common, explain the pros and cons of each, and help you determine which structure might suit your circumstances best.
What Is Joint Tenancy?
Joint tenancy is a form of property ownership where two or more individuals hold equal ownership of the entire property. It is most used by married couples or de facto partners, and it includes a legal principle known as the right of survivorship.
Key Features of Joint Tenancy:
- Equal ownership: All joint tenants own an equal share of the entire property, regardless of how much each contributed financially.
- Right of survivorship: If one owner dies, their share automatically passes to the surviving joint tenant(s), not their estate.
- No inheritance through a will: A joint tenant cannot leave their share to someone else in a will; it goes directly to the other owner(s).
- Requires all owners to act together: For example, to sell or mortgage the property, all joint tenants must agree.
When Is Joint Tenancy Recommended?
- When buying a family home with a spouse or partner
- Where owners want the surviving person to inherit the full property automatically
- In relationships where financial contributions are shared or considered joint
What Is Tenants in Common?
Tenants in common is a form of ownership that allows each person to own a specific, separate share of the property. Shares do not need to be equal, and each owner can deal with their share independently.
Key Features of Tenants in Common:
- Unequal ownership allowed: One party can own 60% and another 40%, or any other agreed percentage.
- No right of survivorship: When a co-owner dies, their share becomes part of their estate and is passed on according to their will or intestacy rules.
- Individual control: Each co-owner can sell, gift, or leave their share to someone else without needing the others’ consent (though co-owners usually have the right of first refusal).
- Common among investors or family members pooling resources
When Is Tenants in Common Recommended?
- When buying property with friends, business partners, or relatives
- When co-owners contribute different amounts towards the purchase
- When each party wants to leave their share to specific beneficiaries in their will
- For asset protection, estate planning, or family law reasons
Comparison Table: Joint Tenancy vs Tenants in Common
| Feature | Joint Tenancy | Tenants in Common |
| Ownership share | Equal shares only | Can be equal or unequal |
| Right of survivorship | Yes | No |
| Inheritance through a will | Not allowed | Allowed |
| Transfer of interest | Requires agreement of all owners | Individual interest can be transferred |
| Common use cases | Married or de facto couples | Friends, investors, blended families |
| Effect of death | Surviving tenant receives full title | Deceased’s share passes via estate |
Legal and Tax Implications
The type of ownership you choose has legal and tax implications, especially in cases of:
- Estate planning: If you want your share of the property to go to a child or another person after your death, tenants in common may be more suitable.
- Separation or divorce: Joint tenancy may complicate division of property unless severed beforehand.
- Capital gains tax (CGT): How property is sold or transferred can affect CGT calculations for each owner.
- Centrelink and pension entitlements: The way your ownership is recorded can affect eligibility for certain benefits.
Can You Change From Joint Tenancy to Tenants in Common (or vice versa)?
Yes, it is possible to change the ownership structure after the property has been purchased.
- To sever a joint tenancy and become tenants in common, you must lodge a Form 01JP (Severance of Joint Tenancy) with NSW Land Registry Services.
- Converting from tenants in common to joint tenancy requires a new agreement and mutual consent.
It’s crucial to get legal advice before making changes, as these decisions affect ownership rights, succession planning, and family law matters.
Which Structure Should You Choose?
There’s no one-size-fits-all answer. The best option depends on your personal circumstances, financial arrangements, and long-term intentions. Key questions to consider include:
- Do you want your share to pass to a loved one or your co-owner after your death?
- Are you contributing equally to the purchase or are shares different?
- Are you purchasing with a romantic partner, a friend, or a business associate?
- Do you want to retain individual control over your share of the property?
A solicitor can help you weigh the pros and cons, explain the legal implications, and ensure your property agreement aligns with your goals.
Need Help Understanding Your Property Title Options?
At Golottas Solicitors, we offer expert advice on property law, co-ownership agreements, and estate planning. Whether you’re purchasing a home with a partner or investing with others, we can guide you through the process and ensure your interests are protected.
We proudly serve clients across Western Sydney, including Mount Druitt, Blacktown, Fairfield, and Parramatta. Get in touch with our friendly team for clear, practical legal support on all aspects of property ownership.
