Buying Property With Someone Else? What You Need To Know?

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BY VALERIE DYE

When more than one person has title to the same property, such title can be owned by the parties either as joint tenants or as tenants in common.  Whether a property is owned by persons as joint tenants or as tenants in common there can be several implications.  A property owned as joint tenants (or jointly) carries the right of survivorship. This means that if one of the owners of the property dies the property will automatically belong to the other joint owner. For this reason, most married persons who own property together own as joint tenants so that if one party dies the property automatically goes to the other party.  

Since jointly held property has a right of survivorship, persons who are unmarried should think carefully before owning property as joint tenants, especially when they have heirs that they would wish to pass their property to. For instance, if siblings own property together as joint tenants, the spouse of a married sibling does not inherit the property if that sibling dies. Rather, the property will now be owned by the surviving owners.   Furthermore, jointly held property is not considered part of the estate of the deceased and cannot be bequeathed in a will.   

Since ownership as joint tenants can lead to undesired results it may be better in some circumstances for co-ownership to be as tenants in common rather than jointly.  Business partners purchasing property together will be better off owning such property as tenants in common. Persons who own property as Tenants in common may own such property equally on a 50/50 basis or unequally such as 50/40 or to any other degree.  Furthermore, any one of the co-owners can sell or dispose of his share of the property in whatever way he or she desires.

Severing a Joint Tenancy: After property is acquired jointly one of the co-owners may decide that he or he wishes to leave his or her share of the property to someone else in a will.  A co-owner may also wish to dispose of his or her share of the property in other ways.  The fact that a property is owned jointly does not mean that he co-owners are forever bound to be joint tenants. The Partitions Act states that any person who owns property as joint tenants is entitled to have the property partitioned or sold.  As such, joint owners can either agree to sever the joint tenancy and own as tenants in common, or one party may apply to the court to have the joint tenancy severed.

In a few instances the court may determine that, although property is held jointly, the intention of the parties was that the joint tenancy should be severed.  This occurs mainly in cases where spouses are in the process of getting divorced and disposing of property and one party dies before the process is completed. In the 2012 case of Hansen Estate v Hansen the parties were in the process of separating and dividing their assets when the husband died leaving jointly held property.  The Court of Appeal ruled that although the property was still jointly owned the joint tenancy was severed due to a course of dealings which suggested that the parties intended to sever the joint tenancy.  In such cases the court makes it determination based on what is perceived to be the mutual intention of the parties.

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