Joint Tenancy Vs Tenancy in Common
Just how well are your interests best protected?
While many people in Singapore co-own their homes, few are aware that there is more than one way in which co-ownership papers can be drawn up. In their excitement, many take things for granted and end up overlooking their ownership status. Like most things in life, ownership status doesn’t matter if all’s well. However complications may arise should there be a change in the relationship between the owners.
In Singapore, 2 forms of co-ownership exist. These are Joint Tenancy and Tenancy in Common. If you are not sure which form of co-ownership you have opted for, chances are, yours is a Joint Tenancy – something most owners go for, sometimes without realizing its implications.
Joint Tenancy
Under joint tenancy, two or more parties have rights to the land as if they were a single owner. So if one party under a joint tenancy dies, his or her interest automatically passes on to the other party. However, a basic concept – requirement – of joint tenancy is the unity of ownership. What this means is, the following four ‘unities’ have to be observed:
- Unity of time. In other words, the ownership is acquired by all tenants at the same time.
- Unity of title. If A, B and C choose to adopt a joint tenancy, then A, B, C must be named as joint tenants in the same title deed.
- Unity of interest. This simply means that all tenants own equal shares in the property. So if four people are named as joint tenants, they each have 25% interest in the property.
- Unity of possession. All tenants have equal rights to access and possession.
Just as there are 4 ‘unities’ that have to be observed in a joint tenancy, there are 4 ways in which a joint tenancy can be ceased.
- When one joint tenant sells his share in the land to another party. This is known as ‘termination by alienation’.
- When there is a mutual agreement to partition off the joint tenancy.
- When a court imposes an order of sale to partition off the joint tenancy.
- By a unilateral deed of declaration made by a joint tenant who wants to severe the joint tenancy.
While joint tenancy is favoured by more than 70%of the co-owners in Singapore. It is not necessarily the better option. This is because tenancy-in-common, the other form of co-ownership, specific terms of co-ownership are spelt out before the deed is signed.
Tenancy-In-Common
Under the tenancy-in-common, joint owners hold property by shares. And these shares can be of equal percentage or unequal percentage. At the same time, each tenant in common is free to sell off or mortgage his or her interest without the consent of the others. When this happens, the tenancy is not destroyed. Instead, the new owner becomes a tenant in common.
Although tenancies can arise under three circumstances, the most common is probably that which is prescribed by law. An example of this is that of a condominum where all subsidiary proprietors (SPs) are considered to be tenants-in-common as far as the common property of a subdivided building is concerned.
Another circumstance under which a tenancy-in-common may be created is when parties contribute money in unequal shares to the purchase of the property. For example, when two business partners buy a property, it is presumed to be held by them as tenants-in-common.
In fact, if a deed does not specifiy the form of ownership under which the parties are taking title, then the law assumes that it is tenancy in common.
A tenency-in-common can be terminated in a few ways. One is when the parties voluntarily choose to terminate. Another is when one or more tenants ask the court to terminate the co-ownership and divide the property. Or it could be a case of the law stepping in – such as when the landlords become bankrupt and the property is foreclosed.
As mentioned earlier, the advantage of a tenancy-in-common is that the co-owners can specify their own terms before they jointly buy a property.
However if you are thinking of opting for a tenancy-in-common, you will need to inform your lawyers in advance so they can draw up the necessary papers. Even among married couples, tenancy-in-common provides in the event of death for one partner to dispose his or her portion of the asset based on his will. This is unlike joint tenancies where the rule of ownership kicks in – thus ensuring that the surviving party automatically inherits the asset.
Posted on December 26, 2009
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