When two or more people purchase property together in New South Wales, one of the most important decisions to make before settlement is how the title will be held. The two available structures, joint tenancy and tenancy in common, determine not only how the property can be dealt with during your lifetime but also what happens to your share when you die. Getting this decision right at the outset can save significant cost, delay and family conflict later on.
Joint Tenants
Under a joint tenancy, all owners hold the property as a single, indivisible unit. No owner holds a separate, identifiable share. Instead, each has an equal interest in the whole of the property, and this arrangement carries with it the right of survivorship. This means that when one joint tenant dies, their interest does not form part of their estate and cannot be dealt with under their will. It automatically vests in the surviving joint tenant or tenants.
For this reason, joint tenancy is the structure most commonly used by married couples and partners who intend for the survivor to inherit the whole property without the need for probate. Because the surviving owner’s title is updated by lodging a Notice of Death with NSW Land Registry Services rather than through the deceased’s estate, transfer of ownership on death is typically faster and involves less administrative cost.
Joint tenancy does have limitations. An owner cannot leave their interest in the property to someone else in their will while the joint tenancy remains intact, and all owners must hold equal shares. A joint tenancy can be severed during an owner’s lifetime, converting it into a tenancy in common, but under the Real Property Act 1900 (NSW) this generally requires registration of the relevant transfer to take effect.
Tenants in Common
Under a tenancy in common, each owner holds a separate, distinct share in the property. These shares do not need to be equal. Two purchasers might hold 50/50, or the split might reflect unequal financial contributions, such as 70/30 or 90/10. This structure is often used by siblings, friends, or family members assisting one another to enter the property market, as well as by de facto partners or blended families who want more flexibility over how their share is ultimately distributed.
Critically, there is no right of survivorship. On the death of a tenant in common, their share does not pass automatically to the other owner. It forms part of their estate and is distributed according to their will, or, if they die without a valid will, under the rules of intestacy. This gives owners far greater control over succession planning, but it also means that probate or letters of administration may be required before the deceased’s share can be formally transferred.
Key Differences to Consider
• Survivorship – joint tenants automatically inherit a deceased co-owner’s share; tenants in common do not.
• Share size – joint tenants must hold equal interests; tenants in common can hold unequal shares reflecting actual contribution.
• Estate planning – a tenant in common’s share can be left to a beneficiary of their choosing in their will; a joint tenant’s interest cannot.
• Asset protection and liability – as tenancy in common creates distinct shares, it can offer clearer delineation of each owner’s individual interest, which may be relevant where one owner has separate creditors or financial exposure.
• Blended families and second relationships – tenancy in common is frequently preferred where owners want their share to pass to their own children rather than automatically to a surviving co-owner.
Which Structure Suits You?
There is no single correct answer. The right structure depends on your relationship with your co-owner, the size of each person’s financial contribution, and your intentions for the property on death. Under the Conveyancing Act 1919 (NSW), a disposition to two or more people is presumed to create a tenancy in common unless the transfer expressly states otherwise, though in practice NSW Land Registry Services requires the tenancy type to be expressly nominated on the transfer at the time of purchase. This makes it essential to turn your mind to this decision before the contract is signed, rather than leaving it to default.
It is also possible, in some circumstances, to structure ownership as a hybrid, where two parties hold as joint tenants as to one share and another two parties hold as joint tenants as to a separate share, with the two shares held as tenants in common between the two pairs. This can suit arrangements such as parents assisting adult children onto title.
How Joseph Grassi + Associates Can Help
Choosing between joint tenancy and tenancy in common has lasting consequences for your estate and your co-ownership rights, and the right choice will depend on your individual circumstances. Joseph Grassi + Associates can advise on the most appropriate structure for your purchase and ensure it is correctly reflected in your contract and transfer documents. Contact us on (02) 4702 5905, email info@grassiassociates.com.au, or visit grassiassociates.com.au to arrange a consultation.
This article is intended as general information only and does not constitute legal advice. For advice specific to your circumstances, please contact Joseph Grassi + Associates.
