Buying property in Australia is a very significant investment. When there is more than one buyer — whether spouses, siblings, or close friends — it is very important to clearly establish your ownership of the property. Today we will focus on the forms of property ownership available when two or more parties purchase a property together.

In Australia, co-ownership comes in two forms: joint tenancy and tenancy in common.

1. Joint tenancy

Also known as joint ownership, this means both parties hold equal rights in the property. This form of co-ownership is commonly seen between spouses and other partners in long-term committed relationships. Under this arrangement, all buyers own the property jointly — meaning the risks, rights, and benefits of the property are shared by all joint tenants.

This form of co-ownership carries the “right of survivorship”. Put plainly, when one joint tenant dies, the deceased joint tenant’s interest automatically passes to the surviving joint tenant(s). The deceased’s interest as a co-owner does not form part of their estate to be distributed to their lawfully nominated beneficiaries; instead, it is inherited by the other joint tenants.

For example:

A and B are a married couple who buy a property together as joint tenants — A and B each hold a 50% interest in the property. If A passes away, A’s share immediately passes to B, and B becomes the sole owner of the property. If A, B and C buy a property together as joint tenants, each of the three holds a one-third interest; if A passes away, A’s share automatically passes to B and C, so that B and C each hold a 50% interest in the property.

Of course, if one party wishes to lease or sell their interest in the property to a third party, they must also obtain the consent of the other joint tenant(s).

2. Tenancy in common

Unlike joint tenancy, under tenancy in common the buyers can freely allocate each buyer’s ownership of the property in proportion to their respective shares — that is, the buyers can freely allocate the ownership of the property held in each buyer’s name according to the share proportions.

If, at the time of the initial purchase, the deposits contributed by each party differ significantly, this ownership structure is more suitable, because it accommodates different ownership proportions held in each buyer’s name. Friends and business partners commonly purchase property in this form.

Under tenancy in common, if one party passes away the property does not automatically transfer into the name(s) of the other co-owner(s). Instead, the deceased’s share is distributed in accordance with their will, and the legal process is somewhat more involved than under joint tenancy.

For example:

A, B and C buy a property together as tenants in common. A contributes the most and therefore holds 60% of the ownership, B holds 30%, and C holds 10%.

If A passes away, A’s 60% share is not automatically divided equally between B and C at 30% each. Instead, it forms part of A’s estate and is distributed accordingly.

Under tenancy in common, one party may freely sell or gift their share of the property to another person without needing to obtain the consent of the other co-owners.

? Can a joint tenancy be severed?

As noted above, joint tenancy is commonly used between spouses and other partners in long-term committed relationships. However, in the following situations it is also quite common to want to sever the joint tenancy over the property.

For example:

– The property is to be sold to a third party

– The relationship has broken down and one of the joint tenants unilaterally terminates the joint tenancy

– When one or more joint tenants transfer all of their interest in the property, the joint tenancy can be severed

Severing a joint tenancy is of course possible — it requires completing the relevant forms through the authoritative government agency. For example, in NSW the form can be obtained from Land Services. The form requires the signatures of all owners.

Final thoughts

If buyers decide to purchase a property jointly — whether as joint tenants or as tenants in common — the names of all buyers must be set out in the contract of sale. When paying stamp duty, completing the transfer of title, and registering the buyers’ interests with the land titles office, the form of co-ownership and the ownership proportions must also be specified. Accordingly, when signing the contract of sale, each buyer must inform their solicitor of their chosen form of co-ownership and share allocation, and the solicitor will then advise on the most appropriate joint-ownership arrangement.