Choosing how to own property with someoneelse might seem like a bit of a dry, legal detail, but it can have a massiveimpact down the line, especially when it comes to sorting things out aftersomeone passes away. A simple tick in the wrong box can lead to unintendedconsequences, particularly for blended families. So, let's have a friendly chatabout two common ways to own property in New Zealand: Joint Tenants and Tenantsin Common.

Think of it like this: you're buying a house with your partner, a family member, or even a friend. The ownership structure you choose determines not just how you own it together now, but crucially, what happens to your share if you were to pass away.

 Joint Tenants

Being Joint Tenants is probably the most common way couples own their family home. The best way to understand it is with the concept of "survivorship."

Imagine you and your partner own your home as joint tenants. If, sadly, one of you passes away, their share in the property automatically transfers to the surviving joint tenant. It doesn't matter what your Will says about that property – the right of survivorship overrides it. The last one standing gets the whole lot.

Why is this popular?

On death it's generally a straightforward process. The surviving owner usually just needs to provide the death certificate to update the property records. No need for the property to go through the often more complex and time-consuming process of estate administration(though other assets will still need to be dealt with according to the Will).

For many couples, this aligns perfectlywith their wishes – if one passes, the other should have the security of owningthe home outright.

But here's the crucial bit, especially forblended families - let's say you and your new partner buy a house together asjoint tenants. You both have children from previous relationships. If you passaway first, your share of the house automatically goes to your partner. Yourchildren from your previous relationship? They wouldn't have an immediate legalclaim to a share of that house (without ‘jumping through some difficult legal hoops’).Your partner would own it 100%, and they would then decide who inherits it whenthey pass away (or if they sell it, the proceeds are entirely theirs).

This can be a real shock for families who assumed their kids would naturally inherit their parent's portion of the asset. It's a common scenario that can, unfortunately, lead to disappointment and sometimes, disputes.

Tenants in Common

Now, let's look at Tenants in Common. When you own a property as tenants in common, each owner holds a distinct, separate share. These shares don't have to be equal – one person could own 70% and the other 30%, or you could own it 50/50. The key thing is that these shares are yours to deal with.

What happens on death?

This is where it really differs from joint tenancy. When an owner who is a tenant in common passes away, their share in the property does not automatically go to the other owner(s). Instead, their share becomes part of their estate and is distributed according to their Will(or if they are in a relationship then under the Property (Relationships) Act at the election of the survivor). If there's no Will, then the rules of intestacy (which dictate how assets are divided without a Will) apply.

 Why choose Tenants in Common?

This is particularly relevant for blended families. If you own a property as tenants in common with your partner, you can specify in your Will that your share of the property goes to your children from your previous relationship (subject to any relationship property rights your partner has and wishes to enforce). This ensures they inherit your interest in the home.

If one person is putting in a significantly larger amount of money to buy the property, tenants in common allows for this to be reflected in the ownership shares.

Business partners or friends buying together: It’s a common structure when people who aren't in a spousal-type relationship buy property together, as it clearly defines each person's investment.

The Blended Family Example Revisited

Let's go back to our couple with children from prior relationships. If they bought their house as tenants in common (say,50/50 shares), and one partner passes away, their 50% share would go to whoever they've named in their Will – perhaps their children. The surviving partner would still own their 50% share.

This means the children of the deceased partner would have an interest in the property. Of course, this raises practical questions about what happens next – does the surviving partner buyout the children's share? Do they all agree to sell the property? These are important discussions to have, but the crucial point is that the deceased partner's children aren't automatically excluded from an interest in the asset.

Which One is Right for You?

There's no "one-size-fits-all" answer. It really depends on your individual circumstances and what you want to achieve.

For a couple in a long-term relationshipwith shared children, joint tenancy might be perfectly suitable and offersimplicity.

For blended families, where there is acontracting out agreement which provides for unequal shares, or whereindividuals want to ensure their specific share goes to particularbeneficiaries, tenants in common often provides more control and fairness.

If you're contributing unequal amounts to a property purchase, tenants in common can reflect this but if it is with a partner then a contracting out agreement (pre-nup) would be necessary.

Don't Leave it to Chance

The way your property is owned is a fundamental part of your estate planning. It’s something that should be considered carefully, ideally with independent legal advice, when you're purchasing property. If you already own property and aren't sure how it's held, or if your circumstances have changed (like starting a new relationship or having more children), it's a good idea to check your property records and review your arrangements.

Changing from joint tenants to tenants incommon (or vice versa) is possible, though it does involve some legalpaperwork.

The key takeaway here is to be informed. Understanding the difference between these ownership structures can save a lot of heartache and ensure your assets are dealt with in the way you truly intend. It's all about making sure your property ownership aligns with your wishes for your whānau, now and in the future.

If you're unsure about any of this, please have a chat with your lawyer. We're here to help you navigate these important decisions.