Joint Tenancy vs Tenancy-in-Common: Which Should You Choose?
When two or more people buy a property together in Singapore, one important decision is how they will hold the property.
The two main forms of co-ownership are:
Joint tenancy; and
Tenancy-in-common.
The distinction may appear technical, but it can have significant consequences when one owner passes away, when the property is sold, when the owners wish to change their respective shares, or when a married couple subsequently divorces.
Understanding the difference before purchasing a property can therefore avoid complications later.
What Is Joint Tenancy?
Under a joint tenancy, the co-owners own the property together without separate, distinct shares.
For example, if a husband and wife purchase a property as joint tenants, it is generally inaccurate to say that the husband legally owns 50% and the wife owns 50%. Instead, both are jointly entitled to the whole property.
The most important feature of a joint tenancy is the right of survivorship.
What happens when one joint tenant dies?
When one joint tenant passes away, his or her interest in the property generally passes automatically to the surviving joint tenant or tenants.
It does not ordinarily pass under the deceased owner's Will.
For example:
A husband and wife own their home as joint tenants. The husband passes away. The wife will ordinarily become the sole owner of the property by operation of the right of survivorship.
This can make joint tenancy attractive to married couples who intend for the surviving spouse to receive the property automatically.
What Is Tenancy-in-Common?
Under a tenancy-in-common, each co-owner holds a separate and identifiable share in the property.
For example:
Husband: 70%
Wife: 30%
The shares do not have to be equal.
The key difference is that there is no right of survivorship.
If the husband passes away, his 70% share does not automatically become the wife's property merely because she is the surviving co-owner. His share instead forms part of his estate and will generally be distributed according to his Will or the applicable intestacy laws.
This gives each owner greater control over what happens to his or her share after death.
Joint Tenancy vs Tenancy-in-Common: The Key Differences
| Issue | Joint Tenancy | Tenancy-in-Common |
|---|---|---|
| Ownership shares | No separate or distinct shares | Each owner has a defined share |
| Shares must be equal? | Not expressed as separate percentages | No |
| Right of survivorship | Yes | No |
| Can your share pass under your Will? | Generally no, while the joint tenancy remains | Yes |
| Suitable for unequal ownership proportions | Generally no | Yes |
| Estate planning flexibility | Lower | Higher |
| Commonly used by | Spouses and family members | Investors, business partners and owners contributing different amounts |
Which Is Better for Married Couples?
There is no single answer.
For many married couples purchasing their matrimonial home together, joint tenancy may be appropriate because they want the surviving spouse to own the property automatically if one spouse passes away.
However, tenancy-in-common may be preferable where the spouses:
contributed significantly different amounts towards the property;
want their ownership percentages expressly recorded;
have children from previous relationships;
have particular estate-planning objectives; or
want their respective shares to pass according to their Wills.
For example, a person in a second marriage may want his 50% share in the property to eventually pass to his children rather than automatically to his spouse. Holding the property as tenants-in-common may therefore be more suitable as part of his overall estate plan.
What If We Paid Different Amounts for the Property?
This is an important consideration.
Suppose two parties purchase a private property for $2 million.
One contributes 80% of the purchase price while the other contributes 20%.
If they want their legal ownership to reflect those proportions, they may choose to hold the property as tenants-in-common in an 80:20 ratio.
However, the manner in which the property is legally held is not necessarily determinative of every dispute that may subsequently arise between the parties, particularly in matrimonial proceedings.
Does Holding a Property 50:50 Mean It Will Be Divided 50:50 During Divorce?
Not necessarily.
This is a particularly important distinction for married couples.
When a marriage ends, the Family Justice Courts determine the division of matrimonial assets under the applicable principles of Singapore family law.
The fact that a matrimonial property is registered:
as a joint tenancy;
as tenants-in-common in equal shares; or
as tenants-in-common in unequal shares,
does not necessarily determine how the property will ultimately be divided upon divorce.
The Court may consider matters such as the parties' financial and non-financial contributions and the circumstances of the marriage when determining the appropriate division of the matrimonial assets.
Accordingly, a 70:30 legal ownership structure does not automatically mean that the property will necessarily be divided 70:30 upon divorce.
What Happens to a Joint Tenancy When a Couple Is Getting Divorced?
Divorce does not necessarily mean that the property is immediately sold or transferred.
Depending on the circumstances, the matrimonial property may eventually be:
sold on the open market and the net proceeds divided;
transferred to one spouse;
dealt with by way of a part-share resale, where applicable to an HDB flat; or
retained for a specified period before a subsequent sale or transfer.
The appropriate arrangement depends on matters such as the type of property, financing, CPF usage, eligibility requirements and the terms of the Court Order.
For an HDB flat, the parties must also consider the applicable HDB eligibility requirements before agreeing that one party will retain the flat.
Can Joint Tenancy Be Changed to Tenancy-in-Common?
Yes. A joint tenancy can generally be severed, following which the owners hold the property as tenants-in-common.
This may become relevant where the relationship between the owners has changed or where an owner wishes to undertake estate planning.
However, severing a joint tenancy can have significant legal consequences, particularly because it removes the right of survivorship.
Legal advice should therefore be obtained before proceeding with a severance.
Can Tenancy-in-Common Be Changed to Joint Tenancy?
It may also be possible for co-owners to restructure the manner in which the property is held, subject to the applicable legal, conveyancing, financing and regulatory requirements.
The appropriate documentation and procedure will depend on the property and the circumstances of the owners.
For HDB flats, HDB's prevailing rules and eligibility requirements must also be considered.
Which Should You Choose?
Joint tenancy may be suitable if:
you are purchasing the property with your spouse;
you want the surviving owner to receive the property automatically;
you do not require separate ownership percentages; and
your estate-planning intentions are consistent with the right of survivorship.
Tenancy-in-common may be suitable if:
the owners are contributing different amounts;
you want clearly defined ownership percentages;
you want your share to form part of your estate;
you want greater flexibility in estate planning; or
you are purchasing the property with someone other than your spouse.
The correct structure should be considered at the time of purchase rather than treated merely as a conveyancing formality.
An Important Estate Planning Point
The difference between joint tenancy and tenancy-in-common becomes particularly important when preparing a Will.
If you own a property as a joint tenant, you generally cannot simply use your Will to give your "share" of that property to someone else while the joint tenancy remains in place. The right of survivorship will generally take precedence.
If you own the property as a tenant-in-common, your defined share can generally form part of your estate and be distributed under your Will.
Property ownership and estate planning should therefore be considered together.
Speak to a Singapore Property Lawyer
Choosing between joint tenancy and tenancy-in-common can affect your property rights, estate planning and what happens to the property when one owner passes away.
YY Lee & Associates LLC can advise on the appropriate manner of holding a property, changes in ownership structure, transfers of ownership and other conveyancing matters.
Contact YY Lee & Associates LLC if you require advice on purchasing, transferring or restructuring ownership of a property in Singapore.