Should I Buy 'Jointly' or 'In Common'?

#1

I am often asked, usually by first home-buyers, what is the difference between buying ‘jointly’ or ‘in common’?

Basically, if a couple buys real estate jointly it means that both own 100% of the property. So, if one dies, their name is removed from the title and the survivor is left owning 100%. Consequently, the deceased party does not have the property in their estate and is not dealt with under their Will.

However, if the couple buys the property ‘in common’ (e.g. sharing 50% each), then if one dies their 50% share is part of their estate and is dealt with under their Will. In this scenario the husband could leave his 50% share to a third party, and his wife would own the property 50% in her name, and 50% in the name of the third party.

It is always important to obtain sound financial and legal advice before deciding how to hold real estate. Some people in high-risk occupations (i.e. the risk of being sued) may choose to have their spouse/partner own 100% or they may own in common, with the spouse/partner holding 99% to their 1%.

Peter Mericka
Lawyers Conveyancing

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#2

Hi Peter,
I always have the discussion with my clients who maybe are buying their first home as a couple who are not engaged or married about possibly buying as Tenants in Common. Quite often 1 person is bringing a larger deposit and therefore maybe should have a slightly bigger share of the property. I also remind them that they need to have their wills in place in this scenario so that if the worst happens their share is dealt with in the way they want.
Another situation could be if a family member is gifting money to the couple to buy the home. It may be one persons parent who would want to ensure that their child benefit from the gift if the relationship was to break down.
Unfortunately the statistics say that these things happen and as professionals we need to bring up these items to take the pressure off the couple. Once the discussion is had I would always then point them to a professional like yourself who can deal with the legalities required.

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#3

Yes, I agree with you Rod that it’s always important to have clients consider their Wills. I can recall preparing a Will for a woman who wanted to gift her unit to her youngest daughter because she had assisted her eldest daughter financially. I did a title search to confirm that she owned the property outright and could therefore leave it to her daughter, and she was horrified when I told her that she owned it jointly with the eldest daughter.

We later found out that when the mother down-sized into her unit the eldest daughter was a party to a bank loan she took out. The bank told the conveyancer who handled the purchase that the daughter should be registered on title as co-owner, but the mother simply signed documents provided to her without understanding the consequences.

Peter Mericka
Lawyers Conveyancing

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unlisted #4
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