The Law of Survivorship: Why Is It Important When Buying a House?

When purchasing a property with another individual (such as your partner, parent, sibling, or friend), you may be asked whether you would like to own the property as a joint tenant or tenants in common, both of which are governed by the Law of Survivorship.

This principle holds profound implications for property ownership and inheritance, shaping the way assets are distributed in the event of unfortunate circumstances.

Joint Tenant v Tenants in Common

When purchasing a property with someone, there are two ways in which you can purchase that property:

Joint Tenants; or
Tenants in Common.

Ultimately, the manner of holding can determine the amount of protection that the asset receives and how the property will be distributed when you pass away.

Joint Tenants

A Joint Tenant is sometimes referred to as the right of survivorship.

The Law of Survivorship means that assets, such as land that is jointly owned, do not have a defined interest for the joint owners. Neither owner owns a specific ‘share’ in the land.

Everyone registered on the Title owns the whole of the land, and the last surviving owner of the land will own it absolutely.

If you register as Joint Tenants, upon the passing of one Joint Tenant, the survivor(s) must register this passing upon the Title.

Upon registration, the ownership vests in the surviving Joint Tenant.

The Wills of the Join Tenants will need to be prepared so that they agree with this method of registration.

This is a common choice for married and de facto couples as it is usually their intention to have their property passed to their partners.

Tenants in Common

The alternative method of holding property is as Tenants in Common.

Tenants in Common means that everyone registered on the Title owns a share of the property. Your share is considered a distinct and separate share.

If you register as Tenants in Common, you have the right to leave your portion of the property to whoever you wish.

Even when the death of one of the owners is registered on the Title, ownership does not automatically transfer to the other registered owners.

People may hold property as Tenants in Common if they are purchasing it with friends or as part of a business.

The Law of Survivorship & Estate Planning

Once you have decided how you will own the property, the next important step is to discuss your estate planning, more specifically, organising your Will.

The purpose of a Will is to direct the distribution of your assets in accordance with your wishes after you pass away.

If you pass away without a Will, your assets will be distributed according to the laws of intestacy, not necessarily how you would like.

Estate Planning & Purchasing Real Estate

When you pass away as a Tenant in Common, your interest in the property will be distributed according to your Will.

Given that you own your share in your own right, you are at liberty to do what you wish with it, including leaving it to whoever you wish through your Will.

Further, having a Will in place can ensure that your partner can continue to reside in your property by providing a life interest.

This interest continues until your partner passes away at which time your children may then inherit the family home.

What Happens if I Don’t Prepare a Will?

If you do not have a valid Will in place when you pass away, your assets will be distributed according to the laws of intestacy (this includes any property you hold as a Tenant in Common).

The Administration and Probate Act 1919 specifies that the first $100,000 of your estate will go to your surviving spouse or domestic partner and the balance of your estate will be split equally between your surviving spouse or domestic partner and any children.

In addition to being lengthy, this process may (likely) result in legal fees that could have been avoided with a Will.

More about probate and deceased estates here.

Contact Us

For more information about the Law of Survivorship, contact us at Bambrick Legal today. We offer a free, no-obligation 15-min consultation for all enquiries.