Owning Property Together |
February is the month of love and along with chocolates and flowers, Valentine’s Day often sees new relationships cemented further. If your relationship is blossoming and the future looks bright, it’s a good time to consider the legal implications, especially if you are looking to move in together and buy your first home. Fred and Wilma, good friends of ours at 247 Property, have decided to take the next step in their relationship and move in together. Fred has been saving money since the stone age and wishes to use it to buy a home for himself and Wilma to live in. In New Zealand you can own a property as either joint tenants or tenants in common. It’s important to understand the legal implications of each ownership structure and how it may affect you and your family so you can make the right decision before purchasing so it doesn’t need addressing at a later date. Let’s look at the two scenario’s Fred and Wilma have with regards to ownership:
Joint Tenants
Fred has decided to purchase the new house for Wilma as a gift. The property will be registered in both Fred and Wilma’s names as joint tenants and the Record of Title will show Fred Flintstone and Wilma Slaghoople as the property owners. Fred and Wilma will own this property together without defined shares.
If Fred passes away suddenly, the property will be transferred automatically to Wilma by virtue of survivorship. The property will not form part of Fred’s estate.
Tenants in Common
For this ownership option, Fred and Wilma will own the property with defined shares. Fred has decided that as he is paying for the majority of property, he will only give Wilma a ¼ share. The Record of Title will show the property owners as follows:
Fred Flintstone ¾ share, Wilma Slaghoople ¼ share.
If Fred passes away suddenly, his share of the property will go into his estate and will be dealt with according to his Will or the laws of intestacy if he has no Will. Wilma is not guaranteed his share of the property and, therefore, will have to work with the new shareholder(s) to determine the future of the property and any decisions made regarding the property. However, if it is a few years after the purchase date that Fred passes away, the property title will still be dealt with according to the shares, but Wilma can make a claim against the estate under the Relationship Property Act.
Future Proof your Child(ren)’s Inheritance
Excitingly Wilma and Fred become the proud parents of Pebbles but soon after Fred does indeed pass away. Wilma meets Lou Granite at the Daily Granite where she is now working to support her and Pebbles. Wilma and Lou end up getting married and decided to sell Wilma’s house to enable them to buy a new bigger house for their blended family. They register the new property in both their names as joint tenants. Unfortunately, Wilma suddenly passes away and the house is transferred automatically into Lou’s name. Pebbles is horrified to learn that Wilma’s share of the house is now Lou’s and she has no inheritance as a result.
The untimely deaths of Fred and Wilma had significant implications with regards to property ownership and the stress it caused to Wilma and then Pebbles as a result. It is important to consider yours and your family’s future when entering into an ownership of a property. Fred and Wilma also illustrate the importance of having up-to-date Will’s, especially when there is property involved. If you are unsure of what will work for you and your partner, come and see us so we can talk you through the options. If you don’t have a Will, come and see us as soon as possible so we can give you peace of mind. A Will doesn’t take long to organise and costs very little, so make sure you take the time to get yours done before it’s too late.
Don't forget to contact us about any of your property law questions - we can give you sound advice on the Property Law Act as well as other property legislation.
Joint Tenants
Fred has decided to purchase the new house for Wilma as a gift. The property will be registered in both Fred and Wilma’s names as joint tenants and the Record of Title will show Fred Flintstone and Wilma Slaghoople as the property owners. Fred and Wilma will own this property together without defined shares.
If Fred passes away suddenly, the property will be transferred automatically to Wilma by virtue of survivorship. The property will not form part of Fred’s estate.
Tenants in Common
For this ownership option, Fred and Wilma will own the property with defined shares. Fred has decided that as he is paying for the majority of property, he will only give Wilma a ¼ share. The Record of Title will show the property owners as follows:
Fred Flintstone ¾ share, Wilma Slaghoople ¼ share.
If Fred passes away suddenly, his share of the property will go into his estate and will be dealt with according to his Will or the laws of intestacy if he has no Will. Wilma is not guaranteed his share of the property and, therefore, will have to work with the new shareholder(s) to determine the future of the property and any decisions made regarding the property. However, if it is a few years after the purchase date that Fred passes away, the property title will still be dealt with according to the shares, but Wilma can make a claim against the estate under the Relationship Property Act.
Future Proof your Child(ren)’s Inheritance
Excitingly Wilma and Fred become the proud parents of Pebbles but soon after Fred does indeed pass away. Wilma meets Lou Granite at the Daily Granite where she is now working to support her and Pebbles. Wilma and Lou end up getting married and decided to sell Wilma’s house to enable them to buy a new bigger house for their blended family. They register the new property in both their names as joint tenants. Unfortunately, Wilma suddenly passes away and the house is transferred automatically into Lou’s name. Pebbles is horrified to learn that Wilma’s share of the house is now Lou’s and she has no inheritance as a result.
The untimely deaths of Fred and Wilma had significant implications with regards to property ownership and the stress it caused to Wilma and then Pebbles as a result. It is important to consider yours and your family’s future when entering into an ownership of a property. Fred and Wilma also illustrate the importance of having up-to-date Will’s, especially when there is property involved. If you are unsure of what will work for you and your partner, come and see us so we can talk you through the options. If you don’t have a Will, come and see us as soon as possible so we can give you peace of mind. A Will doesn’t take long to organise and costs very little, so make sure you take the time to get yours done before it’s too late.
Don't forget to contact us about any of your property law questions - we can give you sound advice on the Property Law Act as well as other property legislation.