Owning your piece of the puzzle
Thursday, 3 July 2014
Many people purchase property as a couple, with family, friends or business associates. This can help ease the ongoing affordability of the mortgage or reduce the upfront costs to get started sooner.
There are two forms of joint ownership so it’s important to know the difference to be able to choose what’s best for you.
Joint tenants own the property equally. This tends to be the most common type of ownership for residential homes, particularly amongst couples.
In the event of a joint tenant passing away, their share will be split equally amongst the surviving tenant/s. In general, a joint tenant can’t choose to pass on their share to someone else upon their death.
Tenants in common
Tenants in common can own unequal shares in a property. It is a more flexible form of ownership and the parties involved set out who owns how much when they are buying the property.
This type of ownership is more common with investment and commercial properties. It allows each owner to deal with their share individually; giving them the option to leave their portion of ownership in their will to anyone they choose with the other tenants in common having no legal claim to it.
Unless you stipulate a request for ‘tenants in common’ on a transfer title, ‘joint tenancy’ will prevail so be sure to have the discussion prior.
Whether you decide to buy as ‘joint tenants’ or ‘tenants in common’, it is essential to carefully consider the legal implications of each type of ownership.
Seek professional advice from your conveyancer or solicitor to draw up a co-ownership agreement that outlines potential issues such as maintenance costs, late mortgage repayments and distribution of sale proceeds.
At the end of the day, buying with like-minded individuals who have similar goals will help make your home ownership journey smoother.