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In this edition of ‘It depends’, lawyer Elise Emmerson talks about whether you should purchase a property with another person or a group of people as joint tenants or as tenants in common.

VIDEO TRANSCRIPT

Welcome to this week’s edition of It Depends. Today, we will be talking about whether you should purchase a property with another person or a group of people as joint tenants or as tenants in common.

How are interests in a property held as joint tenants vs tenants in common?

Joint tenants and tenants in common are the most common ways in which a group of people purchase a property. Joint tenants own a property jointly and equally, so this means that they jointly own 100% interest in a property. They don’t have separately identifiable interest in the property. So, for example, this means that if two individuals purchase a property as joint tenants, they jointly own 100% of an interest in the property, not 50% each. So, this can be contrasted with tenants in common, where each tenant in common has a separately identifiable interest in the property, and this can be split up however the tenants in common wish. So, often this is 50/50, but it can also be divided as 70/30 or 90/10, depending on the circumstances of the tenants in common.

What happens to my interests in a property when I die?

The main distinguishing feature between joint tenants and tenants in common is how an individual’s interest in a property is transferred on their death. So, because tenants in common have separately identifiable interest in a property, their interest in the property becomes an asset of their estate and is able to be distributed under the terms of their will. So, this means that their interest in the property can be distributed to anyone that they wish. So, this is different to joint tenants because of the concept of the right of survivorship. So, this means that the joint tenant who passed away, their interest in the property is automatically transferred to the surviving joint tenant on their death. So, this means that the property does not become an asset of their estate and can not be transferred according to the terms of their will.

Should I buy a property as joint tenants or tenants in common?

When deciding whether to purchase your property as tenants in common or joint tenants, the most important issue to consider is how you would like your interest in the property to be transferred on your death. So, if your current and expected future intention is to transfer the property to the person that you are purchasing the property with, such as your spouse, it would probably be more appropriate to purchase the property as joint tenants, and this is because your interest in the property will be automatically transferred to them on your death and will not become an asset of your estate. So, this may also reduce any estate dispute risks in the future. In contrast, if your intention is to transfer your interest in the property to a third party, then it may be more appropriate to purchase the property as tenants in common, so that your interest in the property can be distributed under the terms of your will.