When purchasing property with more than one buyer you have the choice of holding the property in your name as either ‘joint tenants’ or ‘tenants in common’.
Tenants in Common
Tenants in common provides that each party holds land proportionately to their respective interest.
There is a misconception from many practitioners of how this works. This is because a tenant in common’s respective interest in the land is not actually identifiable in any physical sense and is not ‘undivided’ (such as a person saying “I physically own this share and you own that share”).
Although a tenant in common does have a distinct share, it is not physically divided from the other joint tenants’ shares.[1] In fact, each joint tenant holds an ‘aliquot’ portion of rights which together form the ownership of whole of the land in question. So, to be clear, the possession of the land is distributed among all of the tenants in common. For example, one tenant in common may have 20 per cent (%) of the property and the other 80 per cent (%) (one having a 20/80 share and the other having an 80/20 share respectively).
For a tenancy in common, the shares do not have to be equal and can be in any portion making up the whole. To that end, one tenant in common can actually hold a life interest, whilst another the leasehold interest and another the fee simple![2]
Unlike a joint tenancy, each tenant in common consequently has the right to deal with his or her own undivided share as they wish. They can grant it to someone else for life, give it away or otherwise alienate it in any way they deem fit and property, having regard to certain limitations of course!
From an estate perspective, the tenant in common has the absolute right to bequeath their share to the person entitled under the Will. Further, if they die intestate (without a Will) the rules governing intestacy will apply. In Queensland, this is set out in the Succession Act 1981 (Qld).
From our experience, holding property as tenants in common is most common when purchasing investment properties where there is a tax benefit for one owner to have a larger share than the other. If there is no tax benefit and it is a purchase by a husband and wife we would recommend holding as joint tenants as it will be cheaper to deal with if either husband or wife were to pass away.
Joint Tenants
In contrast to a tenancy in common, under a joint tenancy each joint tenant is seised of the whole of the land, along with the other respective joint tenants. Although in some very particular situations, joint tenants can be regarded as having separate ‘interests’,[3] they do not hold proportionate shares in the property in the same way that tenants in common actually do.
In respect of joint tenants, this idea of holding undivided shares is simply not correct as they are said to be seised of the property per my et per tout (meaning ‘for nothing and for the whole’). Basically, this concept means that the rights are shared with the other joint tenants as to the whole of the land, but no individual has a right to a particular share in the property.
There are said to be four unities to joint tenancy:[4]
unity of title – requiring the joint tenant to hold their title under the same instrument;
unity of interest – requiring that the joint tenants’ interests in the land is identical both in nature, extent and duration;
unity of possession – requiring each joint tenant to be entitled to possession of the whole of the land and not just exclusively to oneself, rather enjoyed with the other joint tenants together;
unity of time – requiring that the interests of each joint tenant vests at the same time.
Under a joint tenancy, there is concept known as the 'right of survivorship' which is inherent and necessary because without it, there is said to be no joint tenancy created at all.[5] Basically, this concept means that when one joint tenant dies, the whole of the land remains with the surviving joint tenant/s as the totality of their possession of the land is not actually affected by the death itself. This concept of right of survivorship ties into the notion that the joint tenants hold the land as a whole rather than singularly or in particular shares.
On death, if the survivor of the joint tenants seeks our service, we are able to assist them to complete and lodge the Record of Death. This is done together with the Death Certificate.
From an estate perspective, the right of survivorship cannot be defeated by an attempt to bequeath an interest by ones Will.[6] In effect, a provision contained in a Will attempting to do so is of no consequence at all and can be deemed an inoperable provision.[7] On the flip-side, because (as we have alerted you to) there is no right of survivorship with a tenancy in common, it is actually possible by an express provision in a Will to actually create a tenancy in common with a right of survivorship scenario like this,[8] which is not often seen or discussed much between lawyers and clients in such a situation.
One should be aware that it is also possible to split the ownership between joint tenants and this is something we do on an everyday basis at RHC Solicitors.
Conclusion
Here at RHC Solicitors, we understand the law and how it could affect you and can assist you in reaching the right decision. So regardless of whether you choose to hold property as joint tenants or tenants in common, we can assist you with your conveyance or alternatively severance of the interest.
We can also assist you with your last Will to ensure that your last wishes are carried out.
Contact us now to see one of our lawyers at a time that is convenient to you.
Disclaimer: This publication is not intended to be comprehensive, nor does it constitute legal advice. We are unable to ensure the information is current and there is no guarantee in relation to accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this publication. The views and/or opinions expressed in this publication is that of the author and may not necessarily represent the views and/or opinions of RHC Solicitors.
Scott A. Green ©
[1] Nullagine Investments Pty Ltd v Western Australian Club Inc (1993) 177 CLR 635 at 643-644 per Brennan J.
[2] Ibid .
[3] During one’s lifetime, a joint tenant can defeat the operation of survivorship by converting the interest to one held as tenants in common. This process ‘severs’ the interest and there are various methods to do this; essentially converting into an ‘aliquot’ undivided share held in common, rather than jointly. The result, however, is that the former joint tenant does risk loss through failure to survive.
[4] Peter Butt, Land Law (Lawbook Co, 5th ed, 2006) 214.
[5] Re Robertson (1943) 44 SR (NSW) 103 at 105.
[6] See the matter of Dower; Concise History, pp 566-568; Simpson, History of Land Law, pp 68-69.
[7] Carr-Glynn v Frearsons [1999] Ch 326.
[8] Haddelsey v Adam (1856) 22 Beav 266; 52 ER 1110.