Tenants in common is a form of co-ownership where two or more people each hold a defined share in a property. Unlike joint tenancy, each owner’s share does not automatically pass to the surviving owner on death — it forms part of the deceased owner’s estate. Tenants in common is widely used by investors, business partners and family members buying property together.
What is the difference between tenants in common and joint tenancy?
The key differences are:
- Shares: Tenants in common can hold unequal shares (e.g. 70/30 or 60/40). Joint tenants always hold equal shares.
- Survivorship: On death, a joint tenant’s share automatically passes to the surviving owner(s) regardless of what the will says. A tenant in common’s share passes according to their will or intestacy laws.
- Transfer: A tenant in common can sell or transfer their share independently. Joint tenants must act together.
Why do investors use tenants in common?
Property investors use tenants in common to:
- Hold unequal shares that reflect each party’s financial contribution
- Direct their share of the property to their estate and beneficiaries
- Manage tax outcomes — the higher-income earner may hold a smaller share to reduce their tax liability
- Protect their share in a separation or business dispute
Can I change from joint tenancy to tenants in common?
Yes. This is called severing a joint tenancy and can be done unilaterally by one owner in most Australian states. A lawyer or conveyancer lodges a notice at the land titles office. The change is recorded on the certificate of title.
What happens to a tenants in common share when an owner dies?
The deceased owner’s share passes according to their will. If there is no valid will, the intestacy laws of the relevant state or territory determine who inherits the share. The surviving co-owner does not automatically receive the deceased’s share — they may end up co-owning the property with the deceased’s spouse, children or other beneficiaries.
Is tenants in common right for me?
| Situation | Recommended structure |
|---|---|
| Married couple buying a family home | Joint tenancy (automatic survivorship) |
| Investors with unequal contributions | Tenants in common (unequal shares) |
| Business partners buying commercial property | Tenants in common (independent transfer) |
| Family members buying together for estate planning | Tenants in common (willed to beneficiaries) |
Do I need a co-ownership agreement?
A co-ownership or property syndicate agreement is strongly recommended. It sets out each party’s share, how decisions are made, what happens if one party wants to sell, how costs are split and dispute resolution procedures. Without one, disputes between tenants in common are resolved by the courts — which is slow and expensive.
Frequently asked questions
Can one tenant in common force a sale?
Yes. A tenant in common can apply to the Supreme Court for an order of partition or sale (called a statutory trust for sale). The court can order the property sold and proceeds divided. This is a last resort but is legally available.
Are tenants in common shares shown on the title?
Yes. The shares (e.g. 50/50 or 60/40) are recorded on the certificate of title and are public record.
Can I use tenants in common for an SMSF property purchase?
Yes — SMSFs can hold property as tenants in common with another party, though strict borrowing and related-party rules apply. Get specialist SMSF legal advice before proceeding.
GeeVee verdict: Tenants in common is the preferred structure for investors buying together because it gives each party control over their share and estate planning flexibility. Always formalise the arrangement with a co-ownership agreement drafted by a property lawyer.
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