Joint Proprietors or Tenants in Common: How Should You Own Property in Victoria?

When two or more people purchase property together, they must decide how their ownership will be recorded on the title.

In Victoria, the two most common options are joint proprietors and tenants in common. The choice can affect what happens to the property if an owner dies, how ownership shares are recorded and how the property may be dealt with in the future.

What does manner of holding mean?

The manner of holding describes how two or more registered owners hold their interest in the property.

It is recorded in the Transfer of Land and ultimately appears on the title. This is separate from whose name appears on the loan, who contributes the deposit or who makes the mortgage repayments.

The appropriate choice depends on the purchasers’ relationship, financial contributions, estate-planning intentions and individual circumstances.

The manner of holding is only one part of the purchase, and the Contract of Sale and Section 32 statement should also be reviewed before signing.

What are joint proprietors?

Joint proprietors own the property jointly and have a right of survivorship.

If one joint proprietor dies, their interest in the property automatically passes to the surviving joint proprietor or proprietors. A survivorship application must then be lodged to update the title.

The deceased owner’s interest does not pass under their Will while the joint proprietorship remains in place.

Married and de facto couples often choose joint proprietorship but it is not automatically the correct option for every couple.

What are tenants in common?

Tenants in common each hold a separate share of the property.

The shares may be equal, such as 50 per cent each, or unequal, such as 70 per cent and 30 per cent. The agreed shares are recorded on the title.

If a tenant in common dies their share does not automatically pass to the other owner. It forms part of the deceased owner’s estate and is dealt with under their Will or, if there is no valid Will, the laws of intestacy.

This form of ownership may be considered by purchasers who contribute different amounts, buy as relatives, friends or business partners, or want their respective shares to pass through their estates.

What is the main difference?

The key difference concerns what happens when one owner dies.

With joint proprietorship, the property passes to the surviving owner or owners through the right of survivorship.

With tenants in common, the deceased owner’s share forms part of their estate.

Tenants in common also have clearly recorded shares, whereas joint proprietors hold the property jointly without separate percentage shares appearing on the title.

Does contributing more money automatically create a larger ownership share?

No. Paying a larger deposit or contributing more towards the mortgage does not automatically mean that a purchaser owns a larger registered share of the property.

If purchasers intend to own the property in unequal shares this should be considered before the Transfer of Land is prepared.

The registered ownership is also not necessarily the only factor considered if a dispute later arises. Purchasers contributing unequal amounts should obtain advice about whether a co-ownership agreement or other documentation is appropriate.

Should purchasers have a co-ownership agreement?

People buying with friends, relatives or business partners may benefit from a written co-ownership agreement prepared by a solicitor.

An agreement may address matters such as:

• Each owner’s financial contribution;

• Responsibility for mortgage repayments, rates, insurance and repairs;

• Who may occupy or rent the property;

• How decisions will be made;

• What happens if an owner wants to sell;

• How the property will be valued; and

• How disputes will be resolved.

The manner of holding recorded on title does not deal with all of these practical issues.

What should you consider before deciding?

Before choosing a manner of holding, purchasers should consider:

• Whether their contributions are equal or unequal;

• Whether they want the surviving owner to receive the property automatically;

• Whether they want their share to pass under their Will;

• Whether children or other beneficiaries need to be considered;

• Whether the property is being purchased as a home or investment;

• Any taxation or asset-protection implications; and

• What should happen if one owner wishes to leave or sell their interest.

The choice should be made with an understanding of both the immediate and long-term consequences.

Does the manner of holding override family law?

No. The ownership recorded on title does not necessarily determine how property will be divided following the breakdown of a marriage or de facto relationship.

Family law considers a range of matters extending beyond the names and ownership shares shown on the title. Anyone relying on a particular ownership structure for relationship or asset-protection purposes should obtain specialist legal advice.

Why are Wills still important?

Purchasers should review their Wills and estate-planning arrangements when acquiring property.

A tenant in common should ensure their Will clearly addresses what is to happen to their share.

Although a joint proprietor’s interest usually passes to the surviving owner, a Will remains important for dealing with the property if that person later becomes the sole owner and for the remainder of their estate.

Can the manner of holding be changed later?

It may be possible to change from joint proprietors to tenants in common, or from tenants in common to joint proprietors, after the purchase.

However, this requires a further transfer and may involve lender consent, registration fees, conveyancing costs and taxation or duty consequences.

Some changes involving equal interests may qualify for a duty exemption, but an exemption should never be assumed. Any change in the beneficial ownership shares may result in duty being payable.

It is generally simpler to consider the intended ownership carefully before settlement.

How I can assist

When two or more people purchase property I will ask them to confirm how they wish to hold it before preparing the Transfer of Land.

I can explain the practical conveyancing differences and ensure the chosen manner of holding is correctly recorded. Where the decision involves estate planning, taxation, family law, asset protection or a complex co-ownership arrangement, additional advice from an appropriately qualified professional may be required.

This information is general in nature and does not constitute legal, financial, taxation or estate-planning advice. Ownership arrangements can have significant consequences, and advice should be obtained for your individual circumstances before making a decision.