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Joint Tenancy vs Tenancy-In-Common: Which is right for me?

Introduction


People that own property together in Singapore - in most cases, a husband and wife, have to decide on a type of property ownership. 


The ownership type of the property primarily determines how the interest in the property is distributed upon the death of a co-owner. Therefore, it is important to choose the appropriate ownership type to ensure that the surviving co-owner/s want to avoid dispute over the ownership of the property when one of them passes on.


In this article, we will go over the two types of multi-owner property ownership, Joint Tenancy, and Tenancy-In-Common - both with their unique properties that you should understand in order to decide which is the best for you!



graphical image of a couple buying their house


Joint Tenancy


A joint tenancy agreement outlines that the co-owners own the entire interest in the property together - meaning that each co-owner does not have a distinct share in the property, but jointly own 100% of the property.


This means that all decisions regarding the property must be made jointly by all co-owners, including any decision to sell or rent the property. The right of survivorship applies here, meaning that upon the death of a co-owner, their share of the property will be inherited by the surviving co-owner(s).



graphical image of two people investing in property

Tenancy-In-Common


Under tenancy-in-common, each owner owns a separate and distinct share in the property. The amount of shares owned by each co-owner is decided amongst the co-owners. The other key difference is that the right of survivorship does not apply in this ownership agreement. If a co-owner were to pass on, their share will be passed on to his/her beneficiaries according to their Will. If the co-owner did not leave a Will, their share of the property will instead be distributed in accordance to the Intestate Succession Act.


For example: Persons A and B are co-owners of a property, under a tenancy-in-common ownership agreement. They hold a 30% and 70% share respectively. If person B were to pass on, their 70% share of the property would be passed on to their beneficiary, person C, in accordance to their will. This will then result in Persons A and C holding 30% and 70% shares in the property respectively.



a HDB building in Singapore


Which should I choose?


Each of the previously mentioned ownership agreements have their respective pros and cons suitable for different scenarios. Co-owners are strongly advised to take the time to weigh the merits and drawbacks of each manner of holding before coming to a decision in order to avoid any unfortunate circumstances in the future. While the manner of holding can be legally changed should the situation arise, this comes at the price of additional time and money.



Joint Tenancy is the most suitable option for a couple buying a familial home, and is the default, go-to option for this category of homebuyers. This is to ensure that the family home will be automatically transferred to the surviving spouse. A secondary case for a joint tenancy agreement is for a parent that is buying a property as an inheritance asset for their child. They can opt for a joint tenancy agreement to ensure that the property is inherited in full, with no frills by their child when the time comes.


Tenancy-in-common, on the other hand, is suitable for friends investing in a property together, or in the case of singles over 35 buying a HDB flat together under the Joint Singles Scheme (JSS). This allows the co-owners to own a distinct share of the property which they can manage as singular assets and passed on to their beneficiaries - which are likely not mutual with the other co-owner(s).


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