It is very common in New South Wales for people to enter into co-ownership agreements in relation to the ownership of real estate.
Some common examples include:
- Married or de facto couples purchasing a property together.
- Parents and children purchasing a property together.
- Friends purchasing a property together.
If you own a property with another person or entity, it is important that you know how co-ownership works and what happens if one of the co-owners dies.
In New South Wales there are two ways to own residential property:
- Tenants in Common. This means that each party owns a distinct share. For example, two parties might own 50% each, or three parties might own 33.33% each and so on. You can sell your share or gift it under your will.
- Joint Tenants. This means that as opposed to owning a distinct share in the property, each co-owner owns the whole of the property. This means you cannot sell your share, and upon the death of the co-owner that share will automatically pass to the surviving co-owners, even if the deceased person’s Will says something different.
These types of distinctions become particularly important if one co-owner dies, or for example in the breakdown of a marriage or relationship.
It is important if you are purchasing property with another person or people that you speak to your solicitor about the type of ownership you wish to have.
There are benefits to both types of ownership.
For example, in the context of joint tenants and a married couple, upon the death of one joint tenant the property will automatically pass to the other by registering a Notice of Death, as opposed to an expensive Application for a Grant of Probate.
Similarly, in the context of friends or unrelated parties and the ownership of property, tenants in common is a good way to have flexibility if you wish to sell your share to a third party or to other co-owners in the future.
If you are looking at purchasing a property with another person or entity, contact us to discuss the different types of property ownership you need to consider.