Joint Tenants vs Tenants in Common in WA: What’s the Difference?
If you’re buying property in WA with another person, one decision you’ll need to make is how you want to own it: as joint tenants or tenants in common. This can feel like a fairly minor detail amongst everything else happening during a property purchase, but your choice can have significant consequences later, particularly if one owner dies, you separate, one owner wants to sell, or you simply want to change your ownership structure.
So, what is the difference between joint tenants and tenants in common, and which option is right for you?
What does joint tenancy mean?
When two or more people own property as joint tenants, they own the whole property jointly. No individual percentage shares are recorded against each owner. The most important feature of joint tenancy is the right of survivorship. If one joint tenant dies, their interest in the property automatically passes to the surviving joint tenant or tenants. It does not form part of the deceased person's estate to be distributed under their Will.
For example, if Sam and Alex own their Mullaloo home as joint tenants and Sam dies, Alex automatically becomes entitled to Sam's interest in the property through survivorship.
Couples often choose joint tenancy when buying a home to live in together, although that doesn't necessarily mean it is the right choice for every couple.
What does tenants in common mean?
Tenants in common means that individuals have their own shares in the property. Those shares can be equal, for example, 50/50, or unequal, such as 70/30. Landgate records those respective interests on the title. Shares can be as descriptive as the owners wish - for example, one person could own 1598/3037 shares and the other 1439/3037 shares. As long as they total one whole, the owners can divide the shares however they like.
The other major difference is what happens when an owner dies. Under tenants in common, there is no automatic right of survivorship. Instead, the deceased owner's share will generally be dealt with according to their Will or, if they don't have a valid Will, the applicable intestacy laws. This can make tenants in common appropriate where owners want the ability to leave their share of the property to someone other than their co-owner.
Joint tenants vs tenants in common at a glance
Joint Tenants | Tenants in Common | |
Ownership | Owners jointly own the property | Each owner has a specified share |
Can shares be unequal? | No | Yes |
What happens on death? | Interest passes to surviving joint tenant(s) | Share forms part of deceased owner's estate |
Does your Will determine who receives your interest? | No | Yes (or intestacy laws, if no will) |
Commonly used by: | Couples | Couples, friends, siblings, family members or investors |
What happens to joint tenants when one dies?
This is perhaps the biggest reason to think carefully about your ownership choice. With joint tenancy, the right of survivorship takes precedence over what you've written in your Will for that property.
If you own a home jointly with another person and your Will says you want to leave “your half” of that property to someone else, there isn't actually a separate half-share to leave while the joint tenancy remains in place. The surviving joint tenant becomes entitled to the deceased owner's interest, and a survivorship application is made to Landgate to update the title to show them as the sole owner.
With tenants in common, however, you can deal with your individual share through your estate. For example, if two siblings own a property as tenants in common 50/50 and one sibling passes away, their 50% share would transfer in accordance with their Will (or, if there is no Will, under intestacy laws).
Your choice of tenancy and your estate planning therefore need to work together.
What happens if joint property owners split up?
This is another area where misconceptions can arise. If a couple owns a property 50/50 as tenants in common, that doesn't necessarily mean each person will walk away with exactly 50% following a relationship breakdown. Similarly, being joint tenants doesn't automatically determine how the property will ultimately be divided. Family law considerations can affect the final division of property, regardless of how ownership is recorded on the title.
Practically, one person may buy out the other's interest and have the property transferred into their sole name, or the property may be sold and the proceeds divided according to an agreement or court order.
There may also be transfer duty and tax implications. Certain transfers following a marriage or de facto relationship breakdown may qualify for nominal duty in WA, but specific requirements apply. Your family lawyer and accountant are best placed to advise you on the legal and tax consequences of your particular circumstances.
What if one buyer contributes more money?
“I’m contributing 70% of the deposit, so should we own the property 70/30?” Possibly, but it isn't necessarily that simple. Tenants in common allows buyers to hold unequal shares, so a 70/30 ownership structure is possible. But your initial deposit isn't the only consideration when deciding how a property should be owned.
If you're buying with a friend, sibling, partner or other family member and making substantially different contributions, it's worth obtaining legal and accounting advice before signing your contract.
When do I need to decide?
Ideally, before you sign your Offer and Acceptance. If you've already decided how the property will be owned, you can reflect that in your contract. Otherwise, your conveyancer will need your instructions when preparing your settlement documentation.
Changing purchasers or ownership interests after you've entered into the contract can have transfer duty consequences, particularly when buying with friends or non-immediate family members, so don't assume you can simply change the percentages later without consequence. There are very strict ‘substituted transferee’ provisions which apply where the original buyer on the contract (or their shareholding) differs from the final title. Where substitution is not possible, additional transfer duty will apply to the share of the property being ‘transferred’, even if this happens before settlement.
Can I change from joint tenants to tenants in common later?
Yes, you can change ownership from joint tenants to tenants in common, or vice versa. In WA, a change in tenancy may qualify for nominal duty where the value of each co-owner's interest does not change (e.g. going from Tenants in Common 50/50 to Joint Tenants). However, changing the actual ownership interests can have different legal, duty and tax consequences, so get advice before making the change.
There is also a specific WA transfer duty exemption that may apply when a sole owner adds their spouse or de facto partner to their principal residence. Among other requirements, the parties must be legally married or have been living together as de facto partners for at least two years, and the result must be ownership as joint tenants or tenants in common in equal shares. Other eligibility requirements also apply.
FAQs: Joint Tenants vs Tenants in Common in WA
What is the main difference between joint tenants and tenants in common?
The biggest difference is what happens when an owner dies. Joint tenants own the property jointly and have a right of survivorship (which means upon death, that person's share automatically transfers to the surviving joint tenant(s)). Tenants in common each own a specified share, which can be equal or unequal, and that share is dealt with by their Will when they die.
What happens to a jointly owned property when one owner dies?
If the property is owned as joint tenants, the deceased owner's interest generally passes automatically to the surviving joint tenant(s). If it is owned as tenants in common, the deceased owner's share is dealt with under their Will or, if there is no valid Will, the applicable intestacy laws.
Can tenants in common own different percentages of a property?
Yes. Tenants in common can hold equal or unequal shares, such as 50/50, 70/30, 1598/1439 or any other agreed division. The Certificate of Title records the respective shares.
What happens to a jointly owned house if you split up?
The ownership shown on the title does not determine how the property will ultimately be divided following a relationship breakdown. One owner may buy out the other, or the property may be sold. Family law, transfer duty and tax considerations can also apply, so legal and accounting advice may be required.
Is joint tenancy only for married couples?
No. Joint tenancy isn't limited to married or de facto couples. However, because the right of survivorship means an owner's interest passes to the surviving joint tenant rather than through their estate, buyers should consider whether this reflects what they want to happen in the future.
Can I change from joint tenants to tenants in common?
Yes, you can change between joint tenancy and tenants in common after purchasing a property. However, depending on whether the underlying ownership interests also change, there may be legal, transfer duty and tax implications, so it's important to obtain advice before making the change.
Which ownership option should I choose?
Joint tenants vs Tenants in Common in WA... No single option is automatically better. The right choice depends on who you're buying with, how you want to own the property, your contributions and, importantly, what you want to happen to your interest if you die. Your conveyancer can explain the practical differences between joint tenants and tenants in common, but if you're unsure which structure best suits your circumstances, getting legal, estate planning, and/or accounting advice before signing your contract can prevent complications later.
Buying property with someone else? North Shore Conveyancing can guide you through the settlement process and explain the practical difference between your ownership options. Contact Katelyn for a quote for your next property purchase.
