Buying a property with someone else is an exciting milestone, whether you’re purchasing with a spouse or partner, investing with a family member, or buying alongside a friend.
But there’s an important decision that can easily get lost among finance approvals, building inspections, contracts and moving plans: how will you own the property together?
In Western Australia, when two or more people purchase property, they generally need to decide whether they will hold it as joint tenants or tenants in common.
They may sound like two versions of essentially the same thing, but there are significant differences between them, particularly when it comes to ownership shares and what happens to the property if one owner passes away.
Understanding the basics before settlement can help you make an informed decision about which arrangement is appropriate for your circumstances.
What Does Property Co-Ownership Mean in WA?
When more than one person is registered as an owner of a property in Western Australia, the Certificate of Title records the registered proprietors.
Those owners can hold the property together in different ways.
The two main forms of co-ownership are:
- Joint tenants
- Tenants in common
The distinction isn’t about whether you’re a tenant living in a rental property. In this context, the word “tenant” describes the legal way in which multiple registered owners hold their interests in the property.
The choice you make can have important consequences later, so it shouldn’t simply be treated as another box to tick during your residential property settlement.
What Does Joint Tenancy Mean?
When property is owned as joint tenants, the owners jointly own the property rather than holding separately defined shares.
One of the most important characteristics of joint tenancy is the right of survivorship.
This means that if one joint tenant passes away, their interest in the property passes to the surviving joint tenant or tenants.
For example, imagine a couple, Alex and Sam, purchase their home as joint tenants. If Alex later passes away, Alex’s interest in the property passes to Sam through the right of survivorship.
The deceased owner’s interest does not form a separately defined share that can simply be left to another person through their Will.
A Survivorship Application is generally lodged with Landgate to update the Certificate of Title following the death of a joint tenant. You can read more about how Mosaic assists with Transmission and Survivorship Applications for deceased estates.
Joint tenancy is commonly used by couples, although whether it is appropriate depends on each buyer’s individual circumstances.
What Does Tenants in Common Mean?
With tenants in common, each owner holds a defined share of the property.
Those shares don’t necessarily have to be equal.
Two people might own a property:
- 50/50
- 60/40
- 75/25
or in another agreed proportion.
Importantly, each person’s interest remains a share in the whole property. A 50% interest doesn’t mean one person owns the kitchen and backyard while the other owns the bedrooms and garage!
Unlike joint tenancy, tenants in common do not have the same right of survivorship.
If one owner passes away, their share can generally be distributed according to their Will or, if there is no valid Will, dealt with under the applicable laws governing the estate.
This distinction can make tenants in common particularly relevant where purchasers have different estate-planning intentions or are contributing to a property in different proportions.
Joint Tenants vs Tenants in Common: The Key Differences
At its simplest, the distinction looks like this:
| Joint Tenants | Tenants in Common | |
|---|---|---|
| Ownership | Owners jointly hold the property | Each owner has a defined share |
| Shares | No separately specified shares | Shares are specified |
| Shares must be equal? | Owners have an equal interest in the whole property | No |
| Right of survivorship | Yes | No |
| What happens on death? | Interest passes to surviving joint tenant(s) | Share is dealt with through the deceased estate |
| Often considered by | Couples and spouses | Investors, family members, friends, blended families and buyers contributing different amounts |
While this comparison makes the distinction easier to understand, deciding how to hold a property should take into account much more than who contributed what to the purchase price.
Your estate planning, financial arrangements, family circumstances and future intentions may all be relevant.
Which Option Is Better for Couples?
There isn’t a universal answer.
Joint tenancy is commonly associated with married and de facto couples because of the right of survivorship. If one owner dies, the surviving joint tenant acquires the deceased owner’s interest.
However, that doesn’t automatically mean joint tenancy is the best choice for every couple.
For example, people entering a relationship with children from previous relationships may have particular estate-planning considerations. Others may be purchasing with unequal financial contributions or have reasons for wanting their interest in the property dealt with separately.
This is why it’s important to consider your individual circumstances rather than simply choosing the arrangement you’ve heard is “normal” for couples.
Where estate planning, taxation, family law or other legal considerations are involved, obtaining appropriate professional advice before making the decision is important.
What About Buying Property With Friends or Family?
With the cost of property making shared ownership an option for some buyers, purchasing with a sibling, parent, friend or another family member may be considered as a way of entering the property market.
In these situations, tenants in common may provide flexibility because ownership can be recorded in defined shares.
For example, if two siblings purchase an investment property but contribute different amounts, they might decide, after obtaining appropriate advice, to hold different proportions of the property.
However, the ownership recorded on the title is only one consideration when buying property with someone else.
It’s also worth obtaining advice about matters such as:
- How mortgage repayments and property expenses will be divided
- What happens if one person wants to sell
- What happens if one owner can no longer meet their financial commitments
- How improvements and maintenance will be funded
- What happens if the owners disagree
- What happens to an owner’s share if they pass away
Sorting through these questions at the beginning can be far easier than trying to resolve them after circumstances change.
If the property is being transferred between family members, friends or other related parties rather than purchased through a conventional arm’s-length sale, there may also be additional considerations. Mosaic can assist with Related Party Transactions, including transfers involving spouses, children and other related parties.
What Happens if a Joint Tenant Dies?
The right of survivorship is one of the defining characteristics of joint tenancy.
When a joint tenant dies, their interest is extinguished and the surviving joint tenant or tenants acquire that interest.
However, the deceased owner’s name doesn’t simply disappear from the Certificate of Title automatically.
A Survivorship Application needs to be lodged with Landgate so the title can be updated to reflect the surviving proprietor or proprietors.
Mosaic Settlements can assist with Survivorship Applications as part of our deceased estate settlement services.
What Happens if a Tenant in Common Dies?
The process is different when an owner holds property as a tenant in common.
Because that person has a defined share in the property, their interest does not automatically pass to the other owner or owners.
Instead, the share will generally be dealt with as part of their deceased estate, either according to their Will or under the relevant legislation where there is no valid Will.
A Transmission Application may be required to register the executor or administrator on the Certificate of Title so the property interest can subsequently be dealt with.
This is one of the reasons your choice of ownership structure and your estate planning should be considered together.
Can You Change From Joint Tenants to Tenants in Common Later?
Yes, it is possible to change the tenancy recorded on a Western Australian Certificate of Title.
For example, owners may wish to change from joint tenants to tenants in common, or vice versa, because their circumstances or estate-planning arrangements have changed.
Changes to property ownership can also arise following a separation or divorce. Mosaic Settlements assists with Consent or Court Order property transactions where property needs to be transferred following a relationship breakdown.
However, changing the ownership structure is a legal transaction involving the title and shouldn’t be approached casually.
There may also be duty, taxation, finance, estate-planning or other implications depending on what is being changed and why.
If you’re considering changing how an existing property is held, speak to the appropriate professionals before proceeding.
When Do You Decide How the Property Will Be Owned?
Ideally, this should be considered before you sign your contract to purchase the property.
It’s one of several reasons we recommend speaking to a settlement agent before signing a property contract, rather than waiting until after your offer has been accepted.
If you’re buying with someone else and aren’t sure which ownership arrangement suits your circumstances, raise the issue early.
Your settlement agent can explain the conveyancing process and documentation involved, but depending on your circumstances, you may also need advice from a solicitor, accountant, financial adviser or estate-planning professional before making your decision.
If the broader conveyancing process is new to you, our guide to residential conveyancing in Western Australia is also a useful place to start.
Don’t Treat the Ownership Question as a Formality
There’s plenty to think about when purchasing property.
You’ve probably spent considerably more time thinking about the suburb, purchase price, mortgage, building inspection and whether the couch will fit through the front door than the terminology that will eventually appear on your Certificate of Title.
But joint tenants and tenants in common aren’t interchangeable terms.
How you choose to own a property can affect what happens to your interest in that property many years after settlement has been completed.
Understanding the difference now gives you the opportunity to ask the right questions and obtain appropriate advice before your ownership is registered.
Buying Property With Someone Else? Mosaic Settlements Can Help
At Mosaic Settlements, we help buyers throughout Perth and Western Australia navigate the residential settlement process with clarity and confidence.
If you’re purchasing property with a partner, family member, friend or fellow investor, we’ll make sure you understand the settlement requirements involved and help keep your transaction moving smoothly from contract through to settlement.
Where your ownership decision involves legal, taxation or estate-planning considerations outside the scope of conveyancing advice, we’ll also encourage you to obtain the appropriate professional advice before proceeding.
Buying property in WA? Contact Mosaic Settlements and let our experienced team help make your settlement as straightforward and stress-free as possible.
