Picture this— You and your sister have decided to invest in a house together, marking your entry into the real estate market. Both of you agree to contribute equally to the deposit and mortgage payments. However, life can at times be unpredictable with unexpected turns and challenges.  What would happen in this circumstance if your sister was to die suddenly? What happens to her ‘share’ of the property and what does it depend on?  There are many questions which come to mind with very different answers, depending upon how you and your sister purchased the property initially. What you include in your Will may or may not be legally enforceable, depending on how you purchased the property. 

Today, with the property market being increasingly unattainable for many individuals, more people are exploring alternative purchasing arrangements. It’s no longer predominantly just spouses purchasing together; rather, individuals are choosing to buy with family, friends, and business partners to achieve their real estate dreams. While these arrangements may offer improved flexibility and affordability, they do come with distinct legal and financial considerations. To navigate this intricate landscape, it’s imperative to seek legal advice for well-informed property ownership decisions. 

Property Ownership when there is more than one purchaser can be held in one of two ways. Understanding the differences between these forms of ownership is essential, as they can significantly impact your rights and responsibilities as a property owner. 

Option 1: Joint Tenants: 

In a joint tenancy, all owners have an equal interest in the property, meaning each owner has the right to the entirety of the property, not just a specific portion. A key feature of joint tenancy is the right of survivorship. If one owner dies, their interest in the property automatically passes to the surviving owners, regardless of any Will or trust in place. 

i.e., You and your sister both own 100% of the property as JOINT TENANTS. On your sister’s death, her interest in the property is transferred to you, irrespective of any instructions in her Will.

Option 2: Tenants in Common: 

On the other hand, tenancy in common allows owners to hold unequal shares of a property. Each owner possesses a distinct, separately transferable interest in the property. Unlike joint tenancy, there is no right of survivorship in a tenancy in common. If an owner dies, their share of the property will pass according to their Will. 

i.e., you and your sister choose to each own 50% of the property as TENANTS IN COMMON. On your sister’s death, her share of the property passes in accordance with her Will.  If her Will states her interest in the property passes to her partner, you would then own the property as tenants in common with her partner.  

So, why is it important to seek legal advice in these situations? The decision between joint tenancy and tenancy in common is not one to be taken lightly. Each form of ownership has its own legal and financial implications that can affect estate planning, tax liabilities, and the rights of any people or companies who are owed money. 

The right of survivorship in a joint tenancy might seem advantageous, but it can also lead to unintended consequences.  

At Whyte Just & Moore Lawyers, we will help you understand the different implications of each type of tenancy and guide you through the process of selecting the one which best aligns with your specific needs and circumstances.