Plain English Guide to Protecting Your Interest in a Property

When you purchase real estate with a partner or spouse there are two ways in which your ownership of the property may be described: you can hold the property either as joint tenants, or as tenants in common.

The way in which you own the property, as stated in the contract for sale, will then determine how your interest in the property will be affected in the event of a relationship breakdown or the death of one of the parties.

Unfortunately, many couples do not give enough thought as to how they would like to own a property with their partner/spouse. If you are considering buying a property with your partner or spouse, you may want to discuss your ownership options first, before the excitement of the purchase process takes over!

Joint Tenancy

If you own a property as joint tenants, it means that you own the whole property together. If one joint tenant dies then the surviving joint tenant owns the whole of the property. As a consequence of his/her death, the deceased joint tenant no longer has an interest in the property. The deceased’s interest in the property does not form part of the deceased estate and it is not available for distribution to the beneficiaries.

It is common for a husband and wife to own a property as joint tenants though this is not always appropriate particularly where either of both of them have children from prior relationships. A joint tenancy may also be used where a property is held in trust or in certain business situations.

Tenancy in Common

Tenants in common each own their individual share in the property absolutely. They may hold their respective shares equally or in some other proportion. Where a person owns an interest in a property as tenant in common with another owner, then upon the death of that person his/her estate continues to have an interest in the property.

The deceased’s interest in the property will pass according to the provisions of the deceased’s will or, in the absence of a legal will, in accordance with the rules of intestacy.

A tenancy in common may be the preferred way for a couple to own property if there are children of prior relationships whose interests have to be protected. It is quite common for de facto couples and for investors buying property together to own their property in this way.

A tenancy in common where one owner has a very small interest in the property, such as 1% can also be useful from an asset protection point of view where that person is in a financially risky occupation.

Severing a Joint Tenancy

If you own a property as joint tenant with another person it is possible to unilaterally sever the joint tenancy and convert it into a tenancy in common in equal shares.

This is done by lodging a form at NSW Land Registry Services. The other owner of the property, and any mortgagee, are notified that the form has been lodged and are given the opportunity to object. In there is no objection to the change, the joint tenancy is severed. This procedure is particularly useful for a person who might be leaving a marriage or de facto relationship and no longer wishes his or her spouse or partner to become the sole owner of the property in the event of their death.

For more information on how we can help you with a joint tenancy, please contact our Property Law team.


Disclaimer: The information provided in the document is a general summary and is not intended to be nor should it be relied upon as a substitute for legal or other professional advice.


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