It is important to understand the different types of property ownership when planning your will to ensure your assets are divided according to your intentions. It is also a crucial part of administering an estate so your executor can establish if and how property forms a part of your estate.
There are several ways assets can be owned. Assets can be owned solely by the deceased, jointly with another party, or as tenants in common with other parties.
Sole Ownership
Sole ownership is where a person owns the property by themselves without the involvement of any other party. This means no other party has an interest in the property, it becomes a part of their estate upon their death and is distributed according to their will, or the rules of intestacy if there is no will.
Joint Tenants
Where parties are joint tenants, each party has an undivided and equal share of the property, and each enjoys the same rights. This form of ownership is common with married and de facto couples. This is because of a principle referred to as the Right of Survivorship. For joint tenants, where one owner dies, their share of the property is transferred to the surviving joint tenant and does not become part of the deceased owner’s estate.
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Tenants in Common
Tenants in common refers to a form of property ownership which is flexible and adaptable, as it allows two or more people to have differently defined shares in property. This can be divided into equal shares or unequal shares with varying interests, obligations, and rights. This allows people to hold property in unequal shares for instance where there are different contributions being made to the property by different parties.
What are the Main Differences Between Joint Tenancy and Tenants in Common?
Tenants in common is distinct from joint tenancy in that owners who hold property as tenants in common do not enjoy the Right of Survivorship. When one owner dies, their interests form part of their estate, and do not pass automatically to the other tenants in common. This means their interests are divided according to their will, or in accordance with the rules of intestacy.
Additionally, owners who hold property as tenants in common do not need the consent of the other owners to transfer their ownership to third parties.
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Caitlin Swan is contactable at our office on 8227 1970 if you would like to discuss your requirements and have your will prepared.