The decision to buy a property is always a significant event perhaps even more so if you are buying as a joint owner. However, it is important before the contract is executed to be aware and to consider the best way in which to take joint title. In NSW property can be held jointly as either joint tenants or tenants in common. There are legal and practical differences between the two forms of tenancy.
Joint tenancy is commonly used by married or de facto couples as it allows for both parties to own the property in equal undivided shares. Accordingly, if one of the owners die, the surviving owner will automatically acquire the deceased owners share by way of survivorship. A joint owner cannot leave their share of the property to anyone else in their Will. The Joint tenancy will override the terms of the Will.
Tenants in Common allow for two or more parties (usually friends, relatives or business partners) to purchase a property jointly in specific shares either equally or unequally as agreed between the parties. Often the share in the property will relate to the initial contribution that each owner made towards purchase of the property. Upon the death of a tenant in common that owner’s share of the property will be dealt with in accordance with the terms of their Will. In other words, a tenant in common can choose who to leave their share of the property to via their Will.
It is prudent for joint owners to enter into a Deed of Co-Ownership which is essentially a documented agreement between the joint owners setting out how they will deal with the maintenance and management of the property. But also, to include an agreed mechanism if circumstances arise to enable a joint owner to exit the property. For instance, if one owner wishes to sell the property whilst the other wishes to retain it.
In the absence of an agreement between the owners the only alternative is for a joint owner to apply to the Supreme Court for relief under S66G of the Conveyancing Act 1919. This section allows a co-owner to apply to the Court to appoint a trustee (3rd party) to sell or partition the property. This is a costly and time-consuming exercise, not to mention the accompanying stress for all parties, and therefore best avoided by having the foresight to agree at the time the joint owners purchase the property the terms for their co-ownership.
Although it is preferable to enter into the co-ownership agreement before you purchase, it is never too late to make the decision to enter into such an agreement.
If you are thinking of purchasing a property jointly or are already a joint owner we are able to assist you to prepare a comprehensive property co-ownership agreement specific to your particular circumstances. Give us a call on (02) 9982 1655 or visit our Northern Beaches office located on Fisher Rd, Dee Why.
