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October 05, 2022

Buying A Property With Someone Else? Read This First.

Contributed by Anthony Law Corporation


It is not uncommon to buy a property with perhaps a family member or a friend. When a piece of real estate – land or property – is owned by two or more persons, they are seen as co-owners. PropNex Picks checks in with the legal experts to unpack the forms of property co-ownership and what property owners and would-be buyers should be mindful of.

1. What is Joint Tenancy? What is Tenancy-in-Common?

There are generally two forms of co-ownership of property. Co-owners can choose to hold property either as joint tenants or as tenants-in-common. These two forms of co-ownership are known as the manner of holding.

Joint Tenancy
In a joint tenancy, each owner owns the entire interest in the property. All owners are 100% owners, there are no separate and distinct shares of ownership. Each joint tenant has an identical interest in the whole land and every part of it. No one owner holds any part to the exclusion of the others.

A joint tenancy may be severed either by one joint tenant or generally by all the joint tenants. The joint tenancy can be severed so as to create a tenancy-in-common. However, any change in beneficial interest is subject to payment of the applicable stamp duties.

Tenancy-in-Common
In a Tenancy-in-Common, each co-owner holds a separate and distinct share in the property. For instance, one owner may hold 70% of the property, while another holds the remaining 30%.

2. Joint Tenancy and Tenancy-in-Common: know the key differences/ pros and cons

The Right of Survivorship
In a joint tenancy, the right of survivorship applies. This means that upon the demise of any joint owner, his/her interest in the property would automatically be passed on to the remaining co-owners. This is regardless of whether the deceased joint owner has left behind a will indicating who should inherit the property.

If there were only two joint tenants, the survivor is now seised or in legal possession of the whole property. If there were more than two, the survivors continue to hold the property as joint tenants wholly. This incident, which is known as the right of survivorship, is the most important feature of joint tenancy.

In contrast, the right of survivorship does not apply in a tenancy-in-common. This is because each tenant holds the property in separate and distinct shares. If one owner passes on, his/her share would be distributed according to his/her will or if the deceased owner had not written a will, his/her share would be distributed according to the laws of Singapore pursuant to the Intestate Succession Act (ISA). If the deceased tenant was a Muslim, distribution of the estate will be governed by the Administration of Muslim Law Act (AMLA).

3. Who should know about Joint Tenancy and Tenancy-in-Common, and why?

When purchasing property in Singapore, apart from exercising financial prudence, it is important to determine the purpose or intention of buying the property, whether it is for an investment or other purposes.

Purchasing property and holding it in a joint tenancy may be more suited to married couples with the intention of purchasing a matrimonial home to live in. This is because in the event of death of one of the owners, the rule of survivorship will apply and the property will automatically be vested in the surviving co-owner. The rule will also apply even if the deceased has not drafted a will to vest the property in the surviving co-owner.

Whereas, if parties intend to or plan to own another residential property with their spouse in the future, holding the first property as tenants-in-common may be a more tax efficient manner of holding when deciding to do a decoupling of the first property in the future, depending of course on individuals’ circumstances.

4. Will Joint Tenancy and Tenancy-in-Common impact: a) the proportion each co-owner contributes to the initial down payment and subsequent mortgage payments, and b) how gross proceeds get split upon property sale?

Generally, the manner of holding will not affect the proportion that each co-owner can contribute to the purchase price of the property. The owner of 1% may very well contribute more than 1% towards the purchase price in using cash or via CPF funds. The same applies in relation to subsequent mortgage repayments to the bank.

As regards the apportionment of sales proceeds, parties are free to decide the apportionment. The sales proceeds may be distributed in the names of all the co-owners or with parties’ consent, in a manner which parties have agreed to.

5. Can the manner of property holding be changed and how to go about it? What if the other co-owners refuse to the change?

Generally, manner of holding may be changed. However, any change in any beneficial ownership would be subject to stamp duties.

Tenants-in-common must hold the property 50-50 in equal shares before being able to convert their manner of holding to a joint tenancy.

If the property is owned in unequal shares, then the co-owner holding more shares will need to transfer either by gifting their shares to the other co-owner or by sale and purchase to achieve a 50-50 split. There would be stamp duties payable on any transfer of ownership interest.

Joint tenants who wish to change the manner of holding to a tenancy-in-common are automatically assumed to hold the property in equal shares.

If there is any transfer of ownership shares to one party, the co-owner receiving the shares will also need to pay the relevant buyer’s stamp duties and/or additional buyer stamp duties on the relevant shares that are transferred.

If one joint tenant wishes to change the manner of holding to a tenancy-in-common but the other joint tenant(s) do not want to do so, the willing joint tenant must execute an Instrument of Declaration stating his or her intention to change the manner of holding to being tenants-in-common. The same applies for tenants-in-common intending to change the manner of holding to a joint tenancy, although they will have to hold the property in equal shares first. The Instrument of Declaration will then have to be duly served on the other unwilling joint tenant(s) by a lawyer.

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