Purchasing property with someone? Be sure to consider ownership options

BUYING property with another person may appeal to some individuals.

If you are one of them and you decide to buy a property with someone else — be it your spouse, child(ren), business partner, or friend — one of the most important factors to consider is your ownership (holding) options, specifically whether the property will be registered as a joint tenancy or as tenants-in-common.

Attorney-at-law and adjunct lecturer at The University of the West Indies Kimberly L Taylor said, this decision is important because it has lasting legal as well as financial consequences during your life and upon your passing.

“If buying alone, there is no need for this consideration as you are deemed, sole owner. However, when buying property jointly, you have to know the difference between joint tenancy and tenants-in-common.

“You must put much thought into selecting the better option in how you will own property jointly, [because] there is no one-size-fits-all type of approach. The person investing in a property will have to decide, based on his or her situation — having considered the advantages and disadvantages of each ownership option — which option best serves their interest,” Taylor advised.

She explained that while joint tenants are similar to tenants-in-common in some ways, it is important that you and your co-buyer explore the specifics of each holding option.

In both joint tenancy and tenants-in-common, Taylor said each person has rights over the premises to occupy, lease, rent, and sell.

Whether you choose joint tenants or tenants-in-common, she said it is important to note that all owners have to sell when the time comes, as you alone can’t sell. The differences, she continued, are the points that owners should focus on in determining which package to select.

“With joint tenants, each party will own 100 per cent shares in the property. If one person dies, the remaining person automatically becomes the owner of the property. To have this done, upon the death of the person, an application to Note Death is done at the Office of Titles to remove the name of the deceased person, leaving the other owner. Estate Duties will also become payable to the Government if above the threshold,” Taylor explained.

She noted that author Sampson Owusu in Commonwealth Caribbean Land Law, 2007, outlines that under joint tenancy, every tenant (owner) is said to be “wholly entitled to the whole” of the land. Each owns the whole property, subject to the equal interest of the others. That is, to all intents and purposes, each joint tenant is in exactly the same position as any of the other joint tenants, with respect to the enjoyment of the land.

Another defining feature of the joint tenancy ownership, Taylor said, is that during the life of all owners, a will ought not to be made by any owner for this particular property because it will automatically go or devolve to the remaining owner. The last remaining owner, can, however, will it to whomever.

She pointed out that the joint tenancy holding title is most common — but not exclusive to, neither is it the only option — between husbands and wives. It is also fairly common among close family members, in general, because it allows the property to pass to the survivors without going through probate/letters of administration, which saves both time and money as an application to Note Death goes through a shorter process.

Tenants-in-common, on the other hand, is used most frequently by people who wish to make provisions for other individuals who are not on the title as co-owners, for example, people who are making an investment in a property for business purposes, but would later want family to benefit from their portion, or a situation where a parent is purchasing with one child but has three other children and would want to make provisions under a will for those other three children to benefit from his/her portion.

With this type of ownership, Taylor said that each party can own equal or unequal shares in the property, for instance 50:50, 30:30:40, 70:30, 40:60, or 25:25:50.

“Unlike, in the case of joint tenancy, during the life of each owner a will can and ought to be made by each person in relation to who is to get his/her portion of the property. If a will is done, then a probate application in the court would be done to settle the portion owned by the deceased person. If no will is done, then a letter of administration application will be done in the court to have the portion that belonged to the deceased person dealt with,” Taylor explained.

She said that Estate Duties are also payable to the Government if above the threshold, transmission is done at the Office of Titles into the name of the executor or the administrator, and then transferred to the beneficiary/beneficiaries as per the will or to the beneficiaries who should benefit under intestacy, which includes spouse and all children of the deceased. The beneficiaries and the existing co-owner will then all own the property together.

The attorney-at-law advised that in the case of tenants-in-common, it is important for you to make a will so that you determine who is to benefit from your portion of the property. This way you make provisions for your children, other family members or anyone you would have wished to otherwise benefit in the event that you should die, and also this prevents individuals who should not benefit, in your estimation, from doing so.

Taylor also gave an example for you to consider. She said if a man owns property as tenants-in-common with his wife, has one child with his wife, but had three children prior to marriage and wants to make provisions for the four children, then a better option for him might be tenants-in-common. However, he will now place his wife in a position of having these three children have a say in the property being owned jointly with his wife upon his death — which is indeed a tricky situation that needs much thought.