When determining how to take title to the purchase of real property in New South Wales, transactions involving multiple buyers offer several options. The two most common are joint tenancy (or joint tenants) and tenancy in common (or tenants in common).
In both cases, an owner will be considered to have a percentage share of an “undivided interest”. This means that although the financial interest may be less than 100%, the right to possess the entire property is unimpaired. For example, if someone has a 50% interest in a particular parcel, he has the right to possess the entire property, but would receive 50% of any rents the property generated, or 50% of the proceeds of any sale.
With joint tenancy, all of the interests must be equal. Two joint tenants means each owns a one-half undivided interest, three joint tenants one-third, and so forth. In a sense, each Joint Tenant owns the whole of the property with the other owner(s) and no owner has a specific share in the property while the joint tenancy continues. Therefore the joint tenants will have equal interests in the property and are all entitled equally to any rents and profits.
Another important difference between joint tenancy and tenants in common is survivorship. Upon the death of a joint tenant, the surviving joint tenant(s) will receive the deceased joint tenantʼs interest.
Consequently, we see that joint tenancy is often a popular means of holding title with married couples.
Tenants in Common
Holding title as tenants in common allows the interests in the property to be unequal. This means that one owner could have a 60% undivided interest, a second owner a 25% undivided interest, and the third 15%.
Also, with tenants in common, a deceased ownerʼs interest passes to his/her heirs or beneficiaries under a will, and not to the other owners of the real property. This feature, combined with the ability to have differing ownership interests, makes this type of holding title versatile for investors.
If you need any further information or assistance with the purchase or sale of a property, please feel free to contact one of our Sydney Lawyers on 1300 667 461.
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