The Effects of Property Ownership


Jointly owned, or tenants in common? In this article, we detail the effects of property ownership after the death of an owner.

For many homeowners, the property they reside in will be the biggest asset they own, which is often shared with a partner or friend. Because the value of property in today’s market is so significant, a lot of thought needs to go into how a property should be owned, and, if one owner dies, what should happen to their share of the property. This is an important estate planning exercise that our clients often ask us for assistance with.

Joint Ownership

Most people we encounter at Pier Law own their property Jointly. This is where both parties are registered on the tile together, with no reference to any shares held. These properties are usually held by people in a civil union or de facto relationship.

When you own your property jointly and one of you pass away, the property will automatically pass to the surviving owner, regardless of how the deceased’s Will distributes the property. Any mortgage will also pass to the survivor, and it becomes their responsibility to service any debt still owed on the property.

Tenants in Common (Property owned in shares)

The second type of ownership in property is Tenants in Common. This type of ownership is more common when property owners are friends, or if the owners are entering into secondary romantic relationships with children from previous relationships. With Tenants in Common, owners hold their shares independent of each other. Often if there are two parties, each party will own a 1/2 share of the title, although ¾ and ¼ shares are common as well.

Tenants in common means that if an owner were to die, their Will (or the Administration Act, if they have no will) will apply to their share of the property, meaning the other owner will not receive the deceased’s share of the property automatically. The administrators of the deceased’s estate will be responsible for the deceased’s share and for transferring the deceased’s share of the property on to the beneficiaries under the Will. This may mean the executors will have to transfer mortgage documentation into the estate’s name if mortgage obligations still exist, and ensuring this remains paid.

Tenants in common ownership can cause issues if the surviving spouse isn’t given a life interest to remain in the property after the other owners death. These life interests can be provided for in Wills to allow the survivor to keep residing in the property until such time as they pass away, move, or enter into another romantic relationship.

In conclusion

These two types of property ownership can lead to very different outcomes, so it is important to ensure when you are purchasing property to consider what type of ownership would be best in your circumstance, and ensuring that your Wills reflect the correct ownership you have chosen.

If you own property jointly, it is possible to change the ownership structure of your property to tenants in common. This is something that we work thorough very regularly with our clients.

The costs, both emotionally and financially can be significant if you have not planned your estate accordingly, meaning one of the most important assets you own may not be distributed in a desired manner.

If you would like to talk to one of our friendly experts about your circumstances, please contact us.