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NSW Tenants in Common - Transferring Property Between Children?

Discussion in 'Property Law Forum' started by LWG, 20 July 2016.

  1. LWG

    LWG Member

    20 July 2016
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    Hello all,

    Parent A passed away several years back and to date, the will has not been executed. In the will, Parent A left their share of the property (50%) equally to three children as tenants in common. Parent B has the other 50% share in the property. Parent B's will eventually will leave their 50% share to the three children as well.

    Parent B now wants to execute the will so that the three children become legal owners of their part of the property - the split would be something along the lines of (excuse rounding errors):

    - Parent B - 50%
    - Child 1 - 16.5%
    - Child 2 - 16.5%
    - Child 3 - 16.5%

    The property is worth $800k. There is also a mortgage over the property of $80k.

    My understanding is that each child would have an interest in the property worth around $132k. However, as tenants in common, each child would still be responsible for the entire mortgage of $80k - is that correct? I ask as our main interest is how it would affect our borrowing power.

    There is also an arrangement (informal, not legal) between all parties in respect of paying off the loan. Each is contributing an amount (Parent B contributes half, Child 1,2 & 3 collectively contribute the other half), however, some are ahead in repayments compared to the others - i.e. Child 1 will finish paying their share before Child 3 does. However, if executed as tenants in common, Child 1 would still be responsible for the remainder of the loan, despite having paid off their agreed amount - is that correct?

    Is there any reason why a will should be executed sooner rather than later? The way I see it, it would be best to continue the informal arrangement to pay off the mortgage (and perhaps formalise that arrangement), and then execute the will, so that each child benefits from a share in the property, without having responsibility for the entirety of the mortgage.

    Happy to receive any thoughts and be corrected where I am wrong.

  2. Sophea

    Sophea Guest

    Do A & B hold the property as tenants in common or joint tenants?

    Being on the title does not automatically put you on the mortgage. While the property would obviously remain encumbered by the mortgage, I'm not sure that the mortgage debt would automatically pass to you with your share in the property.
  3. SamanthaJay

    SamanthaJay Well-Known Member

    4 July 2016
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    A & B must have been tenants in common if A was able to leave their share of the property to the 3 children. Joint tenants own it together and the surviving owner owns it absolutely. Neither have a specific share.
  4. Iamthelaw

    Iamthelaw Well-Known Member

    13 September 2016
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    Can you specify whether the grantor expressly stated that the property was to be held by way of tenants in common rather than a joint tenancy?

    Whether co-owners hold property as tenants in common or as joint tenants depends on the intention of the grantor expressed in the relevant instrument (will). If it's not clear (the intention) common law presumes that there is a joint tenancy.

    This would be the first step prior to examining this further.
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