Many people neglect to consider the structure of ownership of a property at the time of purchase. It is a matter that should be considered and advised upon at an early stage, often prior to obtaining pre-approval from the bank. This is because your bank may have certain requirements, depending on the type of finance you require or how much you are borrowing.
Take for example a husband and wife wishing to purchase a new family home. The wife is a self-employed doctor and husband is an employed marketing manager. The couple may wish to consider whether they own the property jointly (as joint tenants or tenants in common), or alternatively do not own the property jointly at all, and that instead the property is purchased solely in the name one of the parties, a Company, a Trust or even a Self-Managed Super Fund. It is important to consider the options early to avoid delays and unnecessary additional costs.
When you buy property with another person there are two (2) ways that you can choose to own it:
(1) Joint tenants: means that you own the whole of the property jointly and is typically how most couples purchase property. If one person dies, the other is immediately entitled to the whole of the property.
(2) Tenants in common: means that you each own a share in the property, which could be as equal as 50/50 or unequal as 99/1. You can choose to sell your share or leave it to someone in your Will.
If your circumstances are such that you may wish to structure your purchase in a manner a little “outside the box” you should seek advice from a qualified lawyer who can advise you on the options, the advantages and disadvantages regarding asset protection, taxation and complexity and other costs of maintaining the structure.
The purchase of a new home is a good opportunity to review your affairs generally, such as reviewing and updating your Will, consideration of whether you are adequately insured, considering whether refinancing may save you money, and considering who could look after your affairs if you were unable to do so in the future and appointing an enduring guardian and trusted attorney.
We are able to assist you with all the steps of your purchase and ensure that your interests are adequately protected. If you are considering purchasing a new property, speak to one of our Conveyancing Lawyers without delay.