What is tenancy-in-common?
Tenancy-in-common refers to a situation where multiple individuals share ownership of land or property, with each co-owner holding a specific portion. This share can vary from 30% to 70% or even 1% to 99%. Other unequal share arrangements are also possible and usually explicitly outlined in the property’s title deed.
This type of ownership arrangement is particularly suitable for property owners who are purchasing for investment purposes or for couples who plan to acquire another property in the near future.
Recommended article: Tenancy-in-Common: Great for Decoupling AND Against Greedy Co-Owners
How does tenancy-in-common work?
Upon the co-owners demise, their ownership stake in the property is transferred to their beneficiaries. The transfer occurs either according to the provisions specified in the individual’s will or, in the absence of a will, under the Intestate Succession Act (Cap. 146).
For instance, Tenant 1 may possess a 60% share, while Tenants 2 and 3 hold 20% each. In the event of Tenant 1’s passing, the 60% ownership share in the property would be transferred to their beneficiaries, while the ownership stakes of Tenants 2 and 3 would remain unchanged.
This arrangement allows for a fair division of ownership interests and ensures that the property remains collectively owned even in the face of individual changes in ownership.
How does Tenancy In Common differ from Joint Tenancy?
In Joint Tenancy, all co-owners have an equal interest in the property, and there exists a ‘right of survivorship.’ This means when one joint tenant dies, their share automatically passes to the surviving joint tenant(s). This is in stark contrast to TIC, where each owner’s stake may be unequal and does not have the right of survivorship.
Popular Uses of Tenancy In Common in Singapore
While not as commonly mentioned as Joint Tenancy, TIC is prevalent in various scenarios:
Business Partnerships: Business partners might buy property as a joint investment but want flexibility in ownership based on their contribution.
Inheritance Planning: Families might use TIC to ensure property shares are distributed among heirs in specific ways.
Friends Buying Property Together: Friends who want to invest together but retain the freedom to sell or bequeath their share independently.
How to Set Up Tenancy In Common in Singapore?
It’s relatively straightforward. When purchasing a property, you’ll need to indicate your preference for TIC in the Option to Purchase (OTP) or Sales and Purchase Agreement (S&PA). It’s crucial to specify the exact share percentages for each owner, especially if they aren’t equal.
Can You Convert from Joint Tenancy to Tenancy In Common (TIC)?
Yes, you can! If joint tenants decide that they’d rather have a TIC arrangement, they can make this change by executing a document called a ‘Declaration of Trust’ or through a process known as ‘severance.’
What happens if a Tenant In Common wants to sell?
A TIC owner can sell their share without the consent of the other owners. However, they’re selling their percentage of the property, not a specific part. The buyer would step into the shoes of the selling tenant in common, inheriting all the rights and obligations of that share.
What if there’s a disagreement among Tenants In Common?
In the event of disagreements that cannot be resolved, any tenant in common can apply for a court order to sell the property and distribute the proceeds. This process is known as “partitioning.”
Conclusion
Understanding Tenancy In Common and its implications is essential for anyone considering this form of property ownership in Singapore. It offers flexibility but also necessitates careful planning and clear communication among co-owners. If you’re considering TIC, it’s always wise to consult a property lawyer to ensure your interests are well protected.
Recommended article: Buying a property: Joint tenancy vs. tenancy-in-common
