Ever heard of a ‘Joint Tenant’ or a ‘Tenant in Common’? You might be wondering what they actually mean and how they differ from one another. Although they sound similar, the terms Joint Tenant and Tenant in Common are two different concepts.
Both terms directly relate to two or more people and their ownership of land or a building. However there are several differences between these two terms which we will discuss. These terms are really important to understand if you are considering going into part-ownership with another person for a commercial or residential property.
Before entering into any agreement, you should always understand exactly what you’re agreeing to and any potential future implications. At TY Lawyers, we have extensive experience as commercial and property lawyers, located in Chatswood, and we can assist you when you’re considering a new property purchase.
What is a Tenancy in Common?
Also referred to as TIC, a Tenancy in Common is when two or more parties have ownership of a residential or commercial property. It could be a building, or a parcel of land.
Multiple parties can have a differing share of ownership - whereby the split of ownership could be uneven - for example, one party may own 20% and the other could own 80%. Both are considered Tenants in Common for the property in question. Although the percentage of property owned can vary, no one owner can claim to own any particular part of the property under a TIC agreement.
A tenancy in common can be created at any time. A new member of a tenancy in common can enter into an already existing agreement at any time, even after the initial inception of the TIC agreement. Likewise a member can also leave a TIC without the agreement needing to cease as a result.
An important benefit of a TIC agreement is getting into the property market with someone to share the financial burden. If one party has more of a deposit or a higher income, the agreement can be split to however the owners like to suit their situation. On the flipside, if one of the parties defaults on the loan for a TIC property agreement, the other must cover this payment to avoid foreclosure.
As Commercial and Property Lawyer experts, we can assist with all your property and legal requirements.
What is a Joint Tenancy?
A joint tenancy also has two or more owners for a building or a parcel of land. However in a Joint Tenancy, all owners’ interest in the property are identical in nature, extent and duration, unlike a TIC which is more flexible.
What if a Member of an Agreement passes away?
Another important difference between a Joint Tenant and Tenancy in Common is when a tenant in common dies, their share of the property passes to their estate and they have the right to leave it to anyone they choose. The TIC agreement can continue on without the need for the property to be sold and proceeds distributed.
Alternatively, when a member of a Joint Tenant agreement dies, the interest of the deceased JT passes to the surviving JT.
There are also tax differences between the two agreements that should be considered and discussed before entering into any agreement.
The team at TY Lawyers in Chatswood are skilled legal professionals, with expertise ranging from business management, company secretary to conveyancing solicitor, commercial litigation, and notary services.
Contact us today and one of our experienced legal professionals will get back to you as soon as possible, call (02) 8007 0135.