Co-owners of land in Australia own their property as either a joint tenant or a tenant in common. Each type of tenancy has different rights attached and determines how each co-owner can deal with the property. This article looks at the features of a joint tenancy and whether joint tenants can sever tenancy if they are in a dispute.
What is a Joint Tenant?
Joint tenants have equal ownership and interest in the property. This means they each own the whole of the land along with the other joint tenants. In other words, each owner does not own an identifiable share of the property. They also have a right to survivorship, which means that if one of the joint tenants dies, the property will automatically pass to the surviving joint tenant, regardless of what the will of the deceased tenant says.
Often, joint tenants are couples in married or long term relationships. However, any people can be joint tenants if they are happy with the consequences of this right to survivorship.
Rights of a Joint Tenant
No matter what the relationship and circumstances are between joint tenants, disputes can inevitably arise. Where a breakdown in the relationship occurs, one or both of the co-owners may want to sell the property and part ways.
Joint tenants can resolve their dispute by either:
- selling to a third party, or
- one tenant selling their interest in the property to the other.
However, this is dependent on all parties coming to the table and reaching a mutual agreement.
Therefore, what happens in a ‘deadlock’ scenario?
All is not lost when a joint tenant finds themselves in a dispute with their co-owner. A joint tenancy can be either:
- unilaterally severed; or
- brought to an end by court ordered sale or partition.
One joint tenant can transfer their interest in the property, which will sever the joint tenancy.
When the tenancy is severed, the co-ownership becomes a tenancy in common, meaning that each co-owner no longer has the right of survivorship.
How Can a Joint Tenant Transfer Their Interest in the Property?
A joint tenant can transfer their interest:
- to a third party (which will require the consent of other joint tenants);
- to themselves;
- by declaring a trust over their interest (i.e. declaring themselves as holding the property on trust for another party); or
- transferring their interest to a trustee to hold on trust for a third party or themselves.
For a joint tenant to transfer the property to themselves, they will need to lodge a form of transfer with the land registry of their state. In New South Wales (NSW), this is known as the NSW Land Registry Services (NSW LRS).
If a joint tenant lodges this form, the Registrar General must notify the other joint tenants.
Forced Sale or Partition
Where co-owners in a joint tenancy are in dispute and cannot reach an agreement, one or more co-owners can apply for the court to order that a trustee be appointed to hold the property on trust for the sale or physical partition of the land.
In most cases, the court will make the order for sale or partition unless there is some reason that would make the sale inappropriate (such as a third party’s interest). However, a court will not refuse the order simply because one co-owner thinks it is unfair.
Generally, the order will be for sale of the property, because a physical partition effectively divides the property into new titles, which will mean decreasing the value of the land.
Of course, there can be many elements that factor into a dispute between co-owners and court proceedings for the sale or partition of land can take months (or even years) to resolve. Therefore, co-owners can save a lot of time and money if they can negotiate and come to an agreement.
When one or more joint tenants of a property no longer want to share their rights equally with their co-owner or do not want their co-owner to have the right of survivorship over the property, there are ways to sever tenancy.
If co-owners are in disagreement or a ‘deadlock’ and cannot reach an agreement, one co-owner can sever the joint tenancy unilaterally. They can either:
- transfer their interest in the property to themselves or someone else; or
- seek a court order for the sale or partition of the land.
If you are a joint tenant needing assistance with a dispute, contact LegalVision’s dispute resolution lawyers on 1300 544 755 or fill out the form on this page.
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