Joint Tenancy vs Tenancy in Common: Understanding Co-ownership in Australia

At a Glance

Joint Tenancy features the "right of survivorship," where a deceased owner's share automatically passes to the survivors.
Tenancy in Common allows for unequal ownership shares (e.g., 70/30) and can be left to beneficiaries in a Will.
The choice of ownership affects land tax, stamp duty, and future estate disputes.
It is possible to "sever" a Joint Tenancy to become Tenants in Common later.
Legal advice is vital when purchasing with friends, business partners, or in blended families.

Joint Tenancy: The Right of Survivorship

Joint Tenancy is the most common form of ownership for married couples or long-term partners. In this arrangement, all owners own the entire property together; there are no distinct "shares."

The defining feature of Joint Tenancy is the right of survivorship. When one joint tenant dies, their interest in the property automatically transfers to the surviving joint tenant(s). This happens regardless of what is written in the deceased person’s Will. The property does not become part of the deceased’s estate, which often simplifies the legal process and avoids probate requirements for that specific asset.

To create a Joint Tenancy, the "four unities" must exist:

Possession: All owners have a right to possess the whole property.
Interest: All owners have the same nature and duration of interest.
Title: All owners must derive their title from the same legal document.
Time: All owners must receive their interest at the same time.

Tenancy in Common: Defined Shares and Flexibility

Tenancy in Common is often preferred by business partners, friends buying together, or "blended families" where individuals wish to leave their portion of the property to children from a previous relationship.

Unlike Joint Tenancy, Tenants in Common hold distinct shares in the property. These shares do not have to be equal. For instance, one person may own 20% while another owns 80%, perhaps reflecting their respective contributions to the purchase price.

Most importantly, there is no right of survivorship. When a Tenant in Common dies, their share passes according to their Will. If they have no Will, it passes according to the laws of intestacy. This provides greater control over long-term wealth distribution but requires a valid Will to ensure the owner's intentions are met.

Practical Case Example: Corin v Patton (1990)

A landmark Australian case, Corin v Patton, illustrates the importance of understanding these structures. Mrs Patton was a joint tenant with her husband. Being terminally ill and wishing to leave her interest to her children rather than her husband, she attempted to "sever" the joint tenancy shortly before her death by transferring her share to a trustee.

However, because the transfer was not fully registered and she had not taken all necessary steps to provide the certificate of title, the High Court held that the Joint Tenancy had not been effectively severed at law. Consequently, upon her death, the right of survivorship prevailed, and her husband became the sole owner of the property, leaving her children with nothing. This case highlights that intentions alone are not enough; the legal procedure for changing ownership types must be strictly followed.

Severing a Joint Tenancy

Life circumstances change. A couple may separate, or business partners may decide to restructure their affairs. In Australia, it is possible to "sever" a Joint Tenancy, converting it into a Tenancy in Common.

This is often done unilaterally (by one party) or by mutual agreement. Severing the tenancy ensures that if one party dies before a property settlement is finalised, their share goes to their chosen beneficiaries rather than their estranged partner. Failing to sever a Joint Tenancy during a relationship breakdown is a common and costly legal oversight.

Key Takeaways

Joint tenants do not have divisible shares; they own the whole property together.
Survivorship is automatic in Joint Tenancy, bypassing the Will.
Tenancy in Common allows for unequal ownership and testamentary freedom.
The method of holding title should reflect your financial contribution and estate planning goals.
Always review your ownership structure during major life changes like marriage or separation.

Frequently Asked Questions

Can I change from Joint Tenancy to Tenancy in Common?

Yes. This is called "severance." It involves lodging a transfer or application with the relevant state Land Registry. In most Australian states, you can do this even without the other owner's consent, provided they are notified.

What happens if all Joint Tenants die at the same time?

In many Australian jurisdictions, if it is unclear who died first (e.g., in an accident), the law presumes the younger person survived the older person for a brief moment. The property would then flow into the estate of the younger person.

Do Tenants in Common have to own equal shares?

No. Tenants in Common can specify any proportion, such as 99/1 or 50/50. This is particularly useful for investors seeking specific tax outcomes or those who contributed different amounts to the deposit.

Which is better for avoiding Land Tax?

This depends on your individual circumstances and the state in which the property is located. Generally, Tenancy in Common allows for more precise tax planning, but you should consult with an accountant regarding your specific thresholds.

If I am a Tenant in Common, can I sell my share without the other's permission?

Technically, yes, you can sell your interest. However, in practice, it is very difficult to find a buyer for a partial share of a property. Usually, owners enter into a co-ownership agreement to dictate how and when the entire property can be sold.