Mozo guides

Property co-ownership: joint tenancy vs tenancy in common

Couple rolling out a carpet in their new home.

When buying a property with another person or people, you’ll need to nominate the ownership structure you plan to enter. The two most common types are joint tenancy and tenancy in common.

Each comes with its own set of rules, particularly around how ownership is divided and who is entitled to the property if one person passes away. We take a look at the main ways joint tenancy and tenancy in common differ, and why you might opt for one over the other.

What is joint tenancy?

Under joint tenancy, each person in the agreement is assigned equal ownership status. Importantly, if one tenant dies, the other has right of survivorship, which means that they automatically assume the deceased tenant’s share of the property.

This overrides any wishes to the contrary expressed in the deceased tenant’s will, so if you’d rather your share of a property be passed on to someone else in the event of your death, this might not be the right co-ownership arrangement for you.

Who should enter a joint tenancy agreement?

This type of agreement is common among married couples or de facto partners that have grown accustomed to sharing their assets equally. It can end when the property is sold to a third party, or when all of the shares in the property are transferred to a single tenant.

Example of joint tenancy

Mark and Caitlin are a married couple who buy a house together. They do so as joint tenants, meaning they both hold a 50% stake in their property.

If either of the two passes away, the title to the property is automatically transferred to the surviving partner, even if this was not detailed in their will.

What is tenancy in common?

Under a tenancy in common arrangement, the share of the property owned by each tenant can be equal or unequal. That means that ownership can be split 60-40, 80-20, or even 99-1.

The division of ownership can be decided upfront by each tenant or determined by how much each person contributes towards the mortgage. For tax purposes, some couples may even assign the higher income earner a smaller stake in a property they both own.

Unlike joint tenancy, there is no right of survivorship in a tenancy in common agreement, meaning that if one tenant passes away, their interest in the property becomes an asset of their estate.

Individual tenants will also be able to dispose of their share of the property as they see fit, and do not require permission from the other tenants if they intend to sell, mortgage, or rent it out.

Who should enter a tenancy in common agreement?

A tenancy in common ownership structure might be preferable for friends or investors who are buying a property together or applicants who won’t be making equal contributions towards the mortgage and want ownership to reflect that.

You might also consider a tenancy in common arrangement if you have children from a previous marriage and would rather your share of a property defaults to them in the event of your death, rather than be passed onto your spouse or their family.

Example of tenancy in common

Gina and Samantha are two friends who decide to buy a property together. They opt for a tenancy in common ownership structure, in which Gina takes a 70% share in the property and Samantha takes a 30% share.

Long after the mortgage has been paid off, Samantha passes away. In her will, she had nominated her son Jonathan as beneficiary of her estate. The 30% share she held therefore passes onto him.

Which one should I opt for?

Whether you opt for a joint tenancy or tenancy in common arrangement will come down to personal preference. However, it’s a good idea to speak to a legal professional who can walk you through the risks involved in each.

They will also help you draw up a co-ownership agreement that outlines the rights and obligations of each co-owner. This will cover things like who will occupy the property, how repayments will be made, and what happens if one person wants to sell when the others don’t. Without this, you could become mired in costly litigation if a dispute arises.

Frequently asked questions

What are the main differences between joint tenancy and tenancy in common?

For starters, joint tenancy confers equal ownership status to each person, while tenancy in common allows ownership to be divided equally or unequally. If split unequally, this can be decided on the basis of personal preference or by who contributes more to the mortgage.

The other major difference is that a tenancy in common arrangement does not carry with it a right of survivorship. That means the portion one person holds is willable to a beneficiary of their choosing, and does not automatically pass onto the other tenant(s) as it would under joint tenancy.

What is right of survivorship?

Right of survivorship dictates how a property will be passed on in the event of an owner’s death. If an owner in a joint tenancy agreement passes away, the surviving owner(s) automatically absorb their share of the property. If there is only one other person in the arrangement, then they will become the sole owner of the property.

Does right of survivorship override a will?

Yes, a valid right of survivorship effectively prevents a property from being included in a deceased person’s estate. That means the portion of a property held cannot be bequeathed to someone via a will and automatically passes onto the other owner(s) in the joint tenancy arrangement.

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Niko Iliakis
Niko Iliakis
Money writer

Niko Iliakis is a finance journalist at Mozo specialising in home loans, property and interest rate movements. With an eye for facts and figures, Niko deep-dives into topics to help readers understand key info and make more informed financial decisions. He is ASIC RG146 (Tier 2) certified for general advice.