17 Sep Buying a property with your partner
The difference between ‘Joint Tenants’ and ‘Tenants in Common’
Buying a property is an exciting time for you and your partner and is often another milestone achieved on your journey together.
When it comes to the transfer documents though, do you purchase it with your partner as ‘Joint Tenants’ or as ‘Tenants in Common’ and will it be in equal shares or different shares, such as 70/30?
According to the Qld Law Handbook, “joint tenancy is a method of owning property that allows all tenants to have their names on the title deed as co-owners. The effect of joint tenancy is that upon the death of one of the joint tenants, their share goes automatically to the other joint tenant/s”. Joint tenancy is most commonly taken in the case of people in relationships who wish the property to go to their partner in the event of their death.
In the event of a death of one partner, the rule of survivorship is applied, so even if the couple had split and a new will had been made, this rule will override the directions contained in the will. For this reason, if you have property that is owned by join tenants and you have split as a couple, but wish to retain the property together, you should speak to your solicitor about the best way to handle this.
Tenants in Common
Tenants in Common is where each of the parties has a share that is generally relative to the amount they have contributed to purchase price. In the event of the death of one of the tenants in common, the share of the deceased will be distributed in accordance with their will. It is important to be aware that the bank however, will deem both parties to be responsible for the debt and if one person defaults they may seek the shortfall from the other party. This option is used mostly between friends or business partners.
What is right for you
While most mortgage/transfer documents are prepared as joint tenants, it is important that you speak to your solicitor and receive professional legal advice about what is right for you in your circumstances. It is also important you obtain accounting and tax advice as to what is financially a better option for you.
Similarly, in the event of a relationship split or the death of your partner it is important to let your solicitor know so they can provide advice appropriate for your situation and make amendments as necessary. Your solicitor and accountant are both important business persons to have on your team and seeking their advice early on may save you money years later.
Purchasing property, whether it be your first one or if you are adding to your portfolio, is a time for celebration as you start to create wealth. However, having the right team around you to assist you in the process can take some of the stress out of the transaction. At Triple Zero Property we do as little or as much as you need and also have brokers, accountants and solicitors who are all at arm’s length that can also assist you on your investment journey. Call us today for a no obligation chat to see how we can help you.