At Pannu Lawyers, our team regularly advises clients who want to co-own property but aren’t clear on the legal consequences of how they hold title. In New South Wales, the two most common forms of co-ownership are Joint Tenancy and Tenancy in Common. Although they may sound similar, the implications are significantly different. We’ve seen firsthand how the wrong choice can create disputes, delays, and unintended outcomes especially when relationships change or someone passes away.
What is Joint Tenancy?
When property is purchased as joint tenants, each co-owner holds the entire property jointly, without any defined share. Both parties have equal rights and responsibilities. The key feature here is the right of survivorship. If one joint tenant dies, their interest in the property automatically transfers to the surviving co-owner. It does not pass under a Will, nor does it become part of the deceased's estate.
This structure is commonly used by married couples or long-term partners who want the other person to inherit the property seamlessly. It avoids probate, simplifies asset transfers, and keeps the process out of court. However, this simplicity can also become a disadvantage. If one party intends to leave their share to children from a previous relationship, joint tenancy may not be appropriate.
What is Tenancy in Common?
Tenancy in common, by contrast, allows each owner to hold a separate and distinct share of the property. The shares can be equal or unequal, depending on the arrangement between the parties. Most importantly, if one co-owner dies, their share becomes part of their estate and is dealt with under their Will or by the intestacy rules if there is no Will.
This structure is common when friends, siblings, or business partners purchase property together, or when parties contribute different amounts. It provides flexibility and individual control. Each owner can sell, mortgage, or bequeath their share independently of the other.
Understanding the Key Differences
To help clients decide, our team always explores their long-term intentions and personal circumstances. The critical difference lies in what happens when one owner passes away.
With joint tenancy, the other co-owner automatically inherits the property. With tenancy in common, the deceased’s share goes to their estate.
Here are the questions we typically ask:
Do you want your share to go to your co-owner or to your family?
Are you contributing unequal amounts to the purchase?
Do you want control over who inherits your interest in the property?
Are you purchasing with a spouse, a friend, or a business partner?
If a client values simplicity and is purchasing with their spouse, joint tenancy may make sense. But when control, estate planning, or uneven contributions are a factor, tenancy in common usually provides a better fit.
Can You Change the Structure Later?
Yes. Many clients come to us later wanting to sever a joint tenancy and convert it into a tenancy in common. This often arises after a relationship breakdown or when updating estate planning. We handle this process through NSW Land Registry Services, ensuring the documentation is prepared and lodged correctly.
It’s important to manage this properly. Errors in the paperwork or failure to notify all parties can lead to legal complications down the track or rejection by LRS. Our team ensures that any changes to the ownership structure align with your legal goals.
Why Legal Advice is Critical
We frequently see people enter into property ownership arrangements without fully understanding the legal structure they’re choosing. Unfortunately, many don’t seek legal advice until it’s too late, when someone has passed away or when a dispute has already begun.
At Pannu Lawyers, our team provides clear, upfront legal advice to protect your interests from the beginning. We don’t rely on assumptions, and we don’t recommend one-size-fits-all solutions. We tailor our advice to each client’s circumstances and ensure they understand every consequence of their decision.
Final Word
The choice between joint tenancy and tenancy in common carries long-term legal and financial consequences. It affects what happens to your share upon death, how much control you retain, and how disputes are resolved. We have seen many fallouts of rushed or uninformed decisions, and we know how to help clients avoid those risks. It is often that we recommend our client to seek some financial advice and taxation advice before choosing the type of ownership.
If you’re thinking about buying property with another person or if you need to revisit an existing title structure, our team at Pannu Lawyers is here to assist. We offer practical advice, clear solutions, and a commitment to protecting your interests from start to finish.
