When buying a property in Queensland, there are two options for joint property ownership: joint tenants and tenants in common. While both involve co-ownership, understanding the differences between these two options can have important legal and financial implications. In this article, we'll explain the key differences between joint tenants and tenants in common for Queensland properties.
Joint Tenants
Firstly, let's define what joint tenants and tenants in common mean. Joint tenancy means the co-owners have an equal share in the property; when one owner passes away, their share automatically passes to the other joint tenant(s).
Tenants in Common
Tenancy in common differs in that each co-owner can have a different share in the property (for example, one owner might have a 60% share while the other has a 40% share). When one owner passes away, their share is passed on to whoever they have nominated in their will.
Another essential factor to consider is how joint tenancy and tenancy in common can impact your financial situation. Joint tenants are considered equal ownership, so if one owner incurs debts related to the property, such as a mortgage, the other owner(s) will be responsible for those debts. With tenancy in common, each owner is responsible only for their share of the property, meaning that debt incurred by one owner will not impact the other owner(s).
Probate Fees
Probate fees may apply to tenants in common. In a joint tenancy agreement, when one owner passes away, their share automatically passes to the remaining owner(s) without probate. For tenants in common, probate may be required to transfer ownership of the deceased owner's share, which can incur fees.
Trust and responsibility
It's also important to consider the impact of choosing one ownership option over the other on your relationship with your co-owner(s). Joint tenancy requires high trust between co-owners, as each owner has equal ownership over the property and is a common choice for the family home.
Investment properties with multiple parties
For tenants in common, there is more room for owners to have different levels of involvement and responsibility in the property, for instance, if an investment property is purchased with multiple parties. Discuss your preferred ownership option with your co-owner(s) to ensure everyone is on the same page.
Which should I choose?
Joint tenancy and tenancy in common are both valid options for co-ownership of a Queensland property. Still, it's essential to consider the legal and financial implications and how they relate to your circumstances before making a decision. Remember that joint tenancy means equal ownership and automatic inheritance, while tenancy in common allows for greater flexibility in estate planning and can protect co-owners from each other's debts.
For any enquiries regarding property purchases or sales, contact Grant and Christina from Penrose Real Estate. The Penrose team are here to assist you in taking the stress out of buying or selling your next property.