First National Coast & Country
There are two types of property ownership contracts: joint tenancy and tenants in common. When there is more than one purchaser, whether it is a married couple, siblings, or friends, it is very important to ensure that the type of ownership agreement you have is the right one.
Getting the type of ownership correct at the start of the purchase process will help to prevent any problems down the track if one of the owners wants to relinquish their share, or upon the death of a co-owner.
Given the property market is becoming increasingly difficult to break for first home buyers, tenants in common contracts is becoming more popular than you think.
Tenants in Common
Tenants in common refers to ownership over a certain property by parties who do not automatically have a right of ownership should one of the parties suddenly die (for example friends or siblings). They are co-owners of the property, however their shares and interest over the property do not have to be equal and depend entirely on the agreed shares of the parties.
If one-party of the tenants in common died, their share would be provided to the beneficiary of their choice.
The joint tenancy ownership structure applies to couples, either married or de-facto.
A joint tenant contract states that your share in the property automatically passes to the surviving owner. With this structure, the property does not form part of your distributable estate.