Background
AustAsia Group’s settlement agency Master Settlements was recently contacted by a young couple, who were in the process of buying a house. The couple were first home buyers and engaged Master Settlements to deal with the property settlement.
As a part of our standard process, the couple provided us with a copy of their Offer & Acceptance (“Contract”). On reviewing the Contract, the experienced team at Master Settlements realised the real estate agent had failed to record the type of ownership the couple wanted to have for the property, which was critical to complete the settlement.
The real estate agent had failed to explain the key differences, importance and implications of the two types of ownerships available to any purchaser of a property, as we have explained below.
With an incomplete Contract, our clients’ property settlement could not proceed.
AAG in Action
Our clients were quite stressed by this problem but also relieved to know that the experienced team at Master Settlements was able to resolve the matter on their behalf, giving them peace of mind.
Our settlement team was confidently able to address the issue and alerted all involved parties in the matter, including the real estate agent and the seller’s settlement agent, within a short span of time. A notice was served that the Contract was incomplete, and required an urgent amendment for the sale to proceed.
Result
The real estate agent acknowledged their error and co-operated with us by providing a complete Contract. Master Settlements was able to carry out the settlement in a timely manner ensuring that our clients’ intentions and best interests were protected. Our clients were delighted with Master Settlements’ knowledge and professionalism and that their settlement was able to happen on time.
Types of ownership of property
Joint Tenancy
This is a form of co-ownership in which the following principles apply:
- Each Joint Tenant/Owner owns the whole of the property with the other Joint Tenants/Owner or Owners. No one party has a defined share in the property whilst Joint Tenancy continues. This means that the Joint Tenants essentially have equal interests in the property and are entitled equally to its rents and profits. There can be two or more Joint Tenants.
- The principle of ‘survivorship’ applies, which means that on the death of one Joint Tenant the surviving Joint Tenant or Joint Tenants automatically continue to hold the whole property by operation of law. Consequently, any property held in Joint Tenancy does not form part of a Joint Tenant’s estate and he/she cannot deal with it in his or her Will.
- In general, Joint Tenancy is common in married couples or partners in a de-facto relationship as they prefer owning the property equally, and for the rule of ‘survivorship’ to apply to their property. It is not so common in other relationships.
Tenancy in Common
In contrast to Joint Tenancy, in this form of co-ownership:
- Property is held in common by one or more persons where each owner has a defined share in the property. Each Tenant in Common share being defined, it forms part of his or her estate and can be dealt with in his or her Will or in the event of an intestacy (person dying without a Will) shall pass on to the beneficiaries set out in the relevant laws.
- Tenants in Common have fixed undivided shares in the property. Tenants in Common may have unequal shares (for example, two-thirds to one party and one-third to the other).
If you hold any property as a Joint Tenant you can convert it to Tenancy in Common however, we recommend taking proper expert advice before taking this action.
All contracts are different, so it is imperative that before any agreements, contracts or transfers are signed that they are reviewed by AustAsia Group in either a Legal or Settlements capacity. If you need more information or any help with your property questions, please call AustAsia Group on (08) 9227 6300 or email clientservices@ww2.austasiagroup.com
Important information and disclaimer
This publication has been prepared by AustAsia Group including AustAsia Real Estate Pty Ltd (REBA Licence No. RA1736) and AustAsia Legal Pty Ltd (ACN 123 160 476).
AustAsia Legal Pty Ltd – Liability limited by a scheme approved under Professional Standards Legislation.
Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Accordingly, reliance should not be placed on the information contained in this document as the basis for making any financial investment, insurance or other decision. Please seek personal advice prior to acting on this information.
Information in this publication is accurate as at the date of writing, 9th October 2019. Some of the information may have been provided to us by third parties. Whilst it is believed the information is accurate and reliable, the accuracy of that information is not guaranteed in any way.
Opinions constitute our judgement at the time of issue and are subject to change. Neither the Licensee nor any member of AustAsia Group, nor their employees or directors give any warranty of accuracy, nor accept any responsibility, for any errors or omissions in this document.
Any general tax information provided in this publication is intended as a guide only and is based on our general understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.