Besides buying a property with a partner, purchasing with others, such as friends or relatives, can be a cost-effective way to enter the property market. By pooling your finances, your purchasing power will increase and you may also be able to consider other options such as location, for example. Before purchasing with another person however, it is essential to understand co-ownership titles and the risks involved with each.
Tenants in common
A tenancy in common would be more likely to exist between unrelated purchasers. The parties each have simultaneous and often unequal shares. An agreement should be put in place to ensure that all parties understand their rights and obligations.
It is also relatively simple for one party to dispose of their share as, unlike a joint tenancy, if a party dies their share goes to the deceased’s heirs.
This is often the preferred form of co-ownership with domestic partners as the interests are held under the same title. The title stipulates that both parties have equal ownership of the entire property for exactly the same period of time.
The ‘right of survivorship’ is central to a joint tenancy. This means that all parties have the same rights with respect to the land. When one party dies, the remaining parties receive their share.
If the joint tenants mutually agree to sell the property, the parties must equally distribute the proceeds. However, the joint tenancy terminates if only one party decides to sell their share.
Upon registration where there is more than one buyer, the registrar will assume you are purchasing as joint tenants. You would need to instruct the registrar if you would prefer to register as tenants in common.
If you are considering buying property with others, call Gleeson and Co Lawyers today on 9534 3002 to discuss your options.