Imagine you're buying a new home with your partner. You're excited to start this new chapter, but have you considered how you'll both own the property? This seemingly small detail can have big implications down the line.
In Singapore, there are two main types of property ownership structures to choose from: joint tenancy or tenancy-in-common. Understanding the difference between these two is crucial, as it affects your legal rights, financial obligations, and inheritance planning. By carefully considering your choice, you can waylay potential complications or disputes in the future. So, read on to learn about their pros and cons and how to decide between joint ownership and tenancy-in-common.
What is Joint Tenancy?
Let's say you and your spouse are buying a BTO flat together. Opting for joint tenancy would mean you both own the entire property together, with no individual shares.
Under this arrangement, the right of survivorship applies. This means that if one of you passes away, the other automatically inherits the entire property, regardless of what your will says.
However, as this arrangement can also have implications if one of you faces financial difficulties or legal issues, do consider the pros and cons of joint tenancy before you rule out tenancy-in-common.
Pros of Joint Tenancy
- Right of survivorship: This ensures a smooth transfer of ownership to the surviving co-owner(s) upon the death of one owner, bypassing the need for a will or probate. This can provide peace of mind and simplify the inheritance process for families.
- Protection from individual creditors: As creditors of one co-owner cannot claim or seize the property without affecting the rights of other co-owners, joint tenancy offers a layer of protection for the property, ensuring that it remains secure even if one owner faces financial difficulties.
- Simplified legal arrangement: The right of survivorship eliminates the need for complicated legal arrangements upon the passing of one of the property owners. This simplifies estate planning and reduces potential legal costs and delays.
Cons of Joint Tenancy
- Equal ownership regardless of contributions: Even if one co-owner contributes more financially, such as when covering the upfront home-buying costs, both parties have equal ownership. This can be a disadvantage if one party invests significantly more in the property purchase or upkeep.
- Vulnerability to co-owners' liabilities: While individual creditors cannot directly claim the property, legal issues involving one co-owner, such as bankruptcy, may complicate the ownership or require court intervention.
- Limited flexibility for investments: Joint tenancy is less suitable for investment or business properties, as it does not allow for customised ownership shares or independent decision-making.
What is Tenancy-in-Common?
Unlike joint tenancy, tenancy-in-common allows you and your co-owners to own distinct shares in the property. For example, you could own 70% while your sibling owns 30%. This arrangement is particularly useful when contributions to the purchase price are unequal, or if you're buying a property with someone other than your spouse.
Under tenancy-in-common, you can enjoy more flexibility and control over your individual share of the property. However, it does mean that your share doesn't automatically go to the other owner if you pass away. Instead, it will be distributed according to your will.
Pros of Tenancy-in-Common
- Freedom of property ownership: New co-owners can be added by transferring or selling shares, providing flexibility for future changes in ownership, such as adding new family members or investors.
- Freedom of decision-making: Co-owners can sell, transfer, or mortgage their individual shares without needing unanimous consent. giving greater autonomy and control over individual financial decisions related to the property.
Cons of Tenancy-in-Common
- Complexity in ownership: Tenancy-in-common structures may require more detailed legal paperwork and potential higher legal fees, as clear documentation and agreements are crucial to avoid misunderstandings over unequal property ownership.
- Potential for disputes: Co-owners may have differing priorities or goals for the property, leading to conflicts over decisions such as selling, renting, or maintenance.
Differences Between Joint Tenancy and Tenancy-in-Common
| Factor | Joint Tenancy | Tenancy-in-Common |
|---|---|---|
| Ownership shares | Both owners come together to own 100% of the property. This means that no individual has a distinct share, and decisions about the property must be made collectively. | Each owner has a defined share in the property, which can be equal or unequal. This allows for greater flexibility in managing and disposing of individual ownership. |
| Transfer of ownership process | Transferring ownership is generally more restrictive. For example, in the decoupling property process for HDB joint tenancy arrangements, specific conditions may need to be met before ownership can be transferred. |
Transfer of ownership is more straightforward. While a jointly-owned property cannot be sold by one owner alone, an individual owner of a tenancy-in-common can sell or transfer their share independently. This option provides greater flexibility and control. |
| Inheritance | The right of survivorship dictates that the surviving co-owner(s) automatically inherit the deceased's share. This simplifies inheritance but limits individual control over bequeathing property. | Each owner can bequeath their share of the property according to their will, providing greater control over inheritance planning. |
| Inheritance process | The inheritance process is typically straightforward, as the property automatically transfers to the surviving owner(s) without probate. | Inheritance may involve probate and distribution according to the will, which can be more time-consuming. |
| Legal implications | Specific legal implications, particularly regarding survivorship and the inability to transfer ownership independently. | Greater legal flexibility, allowing individual owners to manage their shares independently. |
| Creditors claims | Creditors of one owner typically cannot seize the entire property, protecting the interests of other co-owners. | Creditors may have a claim on the individual share of the debtor co-owner. |
| Tax and investment planning | May have implications for tax and investment planning, particularly regarding estate taxes and potential capital gains. | Offers more flexibility for tax and investment planning, as owners can manage their shares independently. |
Joint Tenants or Tenants-in-Common: Things to Consider
Financial Contribution to the Property
If you and your co-owner contribute different amounts to the property purchase, tenancy-in-common might be more suitable. It allows you to reflect your respective contributions in the ownership shares. For instance, if you contribute 80% and your co-owner contributes 20%, you could hold those proportions in the property.
Relationship Between Co-Owners
The choice between joint tenancy and tenancy-in-common can also depend on your relationship with your co-owner. Joint tenancy is often preferred for married couples due to the right of survivorship. However, for less closely related co-owners, such as siblings or friends, tenancy-in-common might offer better protection and flexibility.
The Purpose of Buying the Property
If you're buying the property as your primary residence, joint tenancy might be a simpler and more straightforward option. But if you're purchasing it for investment purposes, tenancy-in-common could offer advantages in terms of managing your investment and potential tax benefits.
How to Check if Your Property is a Joint Tenancy or Tenancy-in-Common in Singapore?
HDB For HDB flats, you can easily check your manner of holding via My HDBPage. Simply log in and navigate to the “My Flat” section to view your flat's details, including the ownership structure.
Private Properties
If you own a private property, you can find out your manner of holding through the Integrated Land Information Service (INLIS) portal. You can obtain your “Property Ownership Information” for a small fee of $5.25.
How to Change the Manner of Holding in Singapore?
HDB
- Check for eligibility: Ensure the proposed change aligns with HDB’s policies and eligibility criteria. For example, to change an HDB joint tenancy to a tenancy-in-common, the change has to be within HDB’s acceptable reasons, such as the addition or removal of a child as an owner.
- Come to an agreement: All co-owners must consent to the change in the manner of holding.
- Fill in application form: Obtain and complete the Application Form for Change in Manner of Holding. This form is available at any HDB Branch or on the HDB website.
- Submit the form: The submission should be made to HDB, along with any other necessary documents, such as proof of identity and ownership.
- Pay the admin fee: A non-refundable administrative fee is payable upon application.
- Legal documentation: An Instrument of Declaration must be executed before a Commissioner for Oaths, which will be lodged with the Singapore Land Authority (SLA) for registration.
- Processing: Subject to HDB’s processing timelines and any other additional requirements, the entire process typically takes several weeks.
Private Properties
- Consult a legal professional: Engage a conveyancing lawyer to advise on the implications and facilitate the change.
- Seek stakeholder consent: All co-owners must consent. If the property is mortgaged, approval from the mortgagee will also be necessary.
- Prepare legal documents: The lawyer will draft the necessary documents, including the Instrument of Declaration, to effect the change.
- Execution and lodgement: All parties will have to sign the documents in the presence of a Commissioner for Oaths before lodging the executed documents with the SLA for registration.
- Pay fees and charges: Legal fees for conveyancing services, registration fees to SLA, and potential stamp duties will need to be paid.
- Processing: The duration generally takes a few weeks to complete, depending on the complexity and promptness of all parties involved.
What If My Co-Owner Refuses to Change the Manner of Holding?
It can be frustrating when you and your co-owner don't see eye-to-eye on decisions relating to your shared property. However, there are still ways to navigate this situation.
Firstly, have an open and honest conversation with your co-owner, explaining your reasons for wanting the change and how it could benefit both of you. Perhaps they are unaware of the implications of the current arrangement or have misconceptions about the process.
If initial discussions don't lead to an agreement, consider these options:
- Provide clear and concise information: Present the facts about joint tenancy and tenancy-in-common, highlighting the pros and cons of each type of ownership structure.
- Address their concerns: Listen carefully to their objections and try to understand their perspective. Are they worried about losing control, facing higher costs, or complicating their inheritance plans? Address their concerns with patience and empathy, offering solutions or compromises wherever possible.
- Seek professional mediation: If direct communication isn't effective, consider involving a neutral third party, such as a lawyer or counsellor, to mediate the discussion. A mediator can help facilitate a constructive conversation, clarify misunderstandings, and guide you towards a mutually agreeable solution.
Final Words: How Should I Choose the Manner of Holding for My Property in Singapore?
Choosing between joint tenancy and tenancy-in-common is a crucial decision with lasting implications. Consider factors like your relationship with your co-owner(s), your financial contributions, and the purpose of the property purchase.
If you're unsure, don't hesitate to seek advice from a qualified professional. We at Mortgage Master are always here to help you navigate these complex decisions and ensure a smooth and informed homeownership journey.
References
Joint Tenancy vs. Tenancy-In-Common: Owning Property | Singsaver
Joint Tenancy Vs Tenancy In Common: Pros & Cons!
Joint Tenancy vs Tenancy-in-Common and How to Change - SingaporeLegalAdvice.com
