Options and Differences with Property Co-ownership

When purchasing a property, whether it be a home or investment property, with a spouse, partner or group of family/friends, there are several factors to consider.

How the property will be owned and the possible future implications of co-ownership can be easily overlooked.  Selecting the wrong option can result in unwanted expensive problems later.

So what are the options, and what are the differences?

Joint Tenants

The property is owned by all co-owners in equal shares.  If there are two then they own half each, if there are three they each own one third, etc. 

A joint tenancy carries with it a Right of Survivorship.  If one co-owner dies, his or her share automatically passes to the surviving co-owner/s – even if the deceased co-owner has a will giving their real estate to another person. 

If all co-owners die at the same time so that it cannot be determined which co-owner died last, the youngest co-owner is deemed to have survived the longest and the whole property will be distributed according to the will of the youngest co-owner. 

A joint tenancy can be very useful when purchasing with a spouse or family members where you would want your co-owners to inherit your real estate.  If you are purchasing real estate for a business venture, and may not necessarily want your co-owners to inherit your share of the property, a joint tenancy is not recommended.

Tenants in Common – In Equal Shares

Like a joint tenancy, the property is owned by all co-owners in equal shares.  But there is no Right of Survivorship.

If one co-owner dies, then that co-owner’s share of the property will pass to the beneficiaries named in their will.  If they do not have a will, their share of the property will be passed according to the rules of succession.

Tenants in Common – In Unequal Shares

Tenants in common need not own a property in equal shares.  If the co-owners intend to make unequal contributions to the purchase, improvement and maintenance of a property, this can be reflected in their ownership.  For example, co-owners can own a property in shares of 55%-45%, 80%-20% etc.

Again, there is no Right of Survivorship. If a co-owner dies, their share of the property will be passed to the beneficiaries under their Will.

Co-Ownership Agreement

Co-owners purchasing a property for business or investment purposes should consider a Co-Ownership Agreement. This Agreement can set out the co-owners’ ongoing rights and responsibilities with respect to the property.

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