When two or more people decide to purchase a home together it is important that they consider how to take title to the property. The manner in which title is taken can affect their rights now and in the future.
In NSW there are two types of tenancy, joint tenants and tenants in common, and there are legal and practical differences between the two.
Tenants in common
Tenants in common are more suitable in situations where the buyers are friends or relatives or business partners and where the owners do not want their share to automatically go to the other owners. Tenants in common can own the property in equal shares or unequally, and is often held in shares comparable to the amount that has been contributed towards the property.
For example if two people buy a property and Buyer 1 pays two-thirds of the purchase price and Buyer 2 pays one-third, they could own the property: A as to 2/3 share and B as to 1/3 share.
A tenant in common can leave their share in the property to anyone they wish. However this needs to be done via a will, therefore it is important that all tenants in common have a valid and current will. A tenant in common has the right to sell, mortgage or lease their share of the property without the agreement of the other owners. In situations where owners cannot agree between themselves, an owner can apply to the Supreme Court for an order to sell the property.
If you are unsure as to whether your property is held as joint tenants or tenants in common, a title search will confirm the tenancy in which the land is held. Fees are payable for title searches and this can be carried out by yourself online on the Property and Information website (www.lpi.nsw.gov.au) or see your solicitor.
This article is general information only and should not be relied on without obtaining further specific information.
Author: Michaela Schmidt