Tenants in common vs joint tenants is one of the first big decisions you face when buying property with someone else, whether that is a partner, a family member, or a friend. It sounds like a technicality, but it can shape what happens to your share down the track.
Both structures let two or more people own a property together, but they work very differently when it comes to selling, passing on your share, or handling an unequal contribution. Understanding the basics before settlement can save a lot of confusion later.
What Do Joint Tenants and Tenants in Common Actually Mean?
Joint tenancy is the ownership structure most people picture when they think of a couple buying a home together. Under this arrangement, all owners hold the property as a single, equal unit rather than as separate portions.
Tenants in common is different. Each owner holds a distinct, separate share, which can be equal or unequal, and that share is legally theirs to deal with as they choose, including leaving it to someone in a will.
Neither structure is automatically better. The right choice depends on your relationship with the other owners, how you are funding the purchase, and what you want to happen to your share in future.
The Key Difference: Right of Survivorship vs a Separate, Willable Share
The biggest difference between the two structures comes down to the right of survivorship. Under joint tenancy, if one owner passes away, their interest automatically transfers to the surviving owner or owners.
This happens regardless of what a person’s will says. A joint tenancy interest cannot be left to someone else through a will, because it simply does not exist as a separate asset once the other owner survives.
Tenants in common works the opposite way. Each owner’s share is treated as their own individual asset. If one owner dies, their share forms part of their estate, distributed under their will or intestacy rules if there is none.
This distinction matters more than people expect, and it is worth thinking through with the help of a solicitor, particularly if you have children from a previous relationship or specific wishes about who should inherit your share. General guidance from Moneysmart on property and estate planning is a useful starting point.
Why Couples and Families Typically Choose One Structure Over the Other
Married and de facto couples buying a home together often lean towards joint tenancy. It reflects shared, equal ownership, and means the family home passes automatically to the surviving partner without going through probate.
Families, friends, siblings, or business partners buying an investment property together tend to favour tenants in common. It lets each person protect their own share and pass it on to their own family.
There is no single right answer. Some couples in blended families choose tenants in common so each partner can leave their share to their own children, while others simply want to keep things straightforward.
How Unequal Ownership Shares Work Under Tenants in Common
One of the main reasons people choose tenants in common is the flexibility to hold unequal shares. This is common when one buyer contributes a larger deposit, earns significantly more, or is putting in savings while the other person is not.
Rather than splitting the property fifty-fifty by default, owners can agree on a split that reflects their actual financial contribution, such as sixty-forty or seventy-thirty. That split is then recorded on the property title.
A few things worth knowing about unequal shares include:
- Ownership percentages are recorded on the title and generally reflect how much each person contributed towards the purchase.
- Rental income and outgoing expenses, such as rates and insurance, are usually shared in line with ownership percentages, though this can vary depending on any private agreement between owners.
- Capital gains on sale are generally split according to ownership share, so it is worth understanding how this may affect your tax position through the ATO.
- A written co-ownership agreement, separate from the title itself, can help set out expectations around costs, sale, and what happens if one owner wants out.
Because these arrangements affect both everyday costs and any eventual profit or loss, it is worth speaking to a mortgage broker or financial adviser before deciding how to split contributions and ownership percentages.
What Happens on Death or If Someone Wants to Sell Their Share
Under joint tenancy, the process on death is relatively simple. The surviving owner or owners become the sole owners automatically, and the title is updated to remove the deceased owner’s name.
Under tenants in common, the deceased owner’s share becomes part of their estate. It may pass to a spouse, child, or other beneficiary named in their will, so remaining owners could end up co-owning with someone new.
Selling a share while everyone is alive also works differently. A tenant in common can generally sell or transfer their own share independently, without agreement from the other owners, though finding a buyer for a partial share can be difficult.
If co-owners cannot agree on selling the whole property, there are legal processes that can force a sale, but these can be lengthy, costly, and stressful. This is exactly the kind of situation a written co-ownership agreement is designed to help avoid.
Why This Decision Matters at the Conveyancing Stage
The ownership structure you choose is documented as part of the conveyancing process, the legal work involved in transferring property from seller to buyer, and is recorded on the title at settlement.
Changing from joint tenants to tenants in common, or vice versa, is possible after settlement, but it usually involves extra paperwork and your state’s land titles office, so it pays to get it right from the start.
Your conveyancer or solicitor should walk you through both options before you sign the transfer documents. This is the ideal time to raise questions about unequal contributions or what happens if your circumstances change.
Conclusion
Choosing between tenants in common vs joint tenants is not just a box to tick on a form. It can shape what happens to your property for years to come, including who inherits it and how easily you can sell your share.
Every situation is different, so speak with a conveyancer, solicitor, or financial adviser about which structure suits your circumstances before you settle.
If you are still exploring, browse seen.com.au for more articles, or explore apartments, townhouses, and land estates across major Australian cities.
FAQs
1. Can I change from joint tenants to tenants in common later on?
Yes, this is usually possible through a process sometimes called severing a joint tenancy, though the steps depend on your state.
It generally involves lodging documents with your state’s land titles office, so it is worth speaking to a conveyancer about the process.
2. Is tenants in common more common for investment properties?
It is a popular choice for investment properties owned by friends, family, or business partners, largely because it allows each owner to hold a distinct, separate share.
That said, plenty of couples also use it as part of their broader estate planning.
3. Does the ownership structure affect how much stamp duty I pay?
Stamp duty, also known as transfer duty in some states, is generally based on the property’s value and each buyer’s share, rather than on whether you choose joint tenants or tenants in common. Because rules vary by state, check with your state revenue office for current figures.
4. What happens if one owner stops paying their share of the mortgage?
This can get complicated, because most home loans make all borrowers jointly responsible for the full debt, not just their individual share.
A written co-ownership agreement can help set out what happens if this occurs, so raise this scenario with a mortgage broker beforehand. If a dispute involves your loan or lender, AFCA can provide free, independent dispute resolution.
5. Can more than two people own a property together?
Yes, both joint tenancy and tenants in common can involve three or more owners, such as a group of friends or several siblings buying together. With more owners, a clear written agreement and early advice from a solicitor become even more important.