Tenants in common agreement
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Who should use this agreement
This agreement “severs” a joint tenancy, and sets out how the sale proceeds of real property will be split between the owners.
- You may be married or in a relationship, and want to know that if you separate, when the property is sold you will each get out what you have put in.
- You may be a couple, group of friends, brother and sister, or parent and child, buying a house together to get on the property ladder.
- You may be buying for business purposes and simply not want the Land Information New Zealand to show your proportionate shares.
This is a simple agreement for owner occupiers. It is not suitable as the basis of a property venture for profit.
The law on co-ownership of property
In law, the relationship of co-owners of property is either as “beneficial joint tenants” or as “tenants in common”. The term “tenant” has no connection with a tenant under a lease. Under either sort of tenancy, a joint owner can insist on a sale.
Usually, your conveyancer will draw the document transferring your property to you in words that make you “beneficial joint tenants”. That means:
- You own the property equally.
- When you sell, the proceeds will be divided equally, even if one of you has contributed more in the meantime.
- If one of you dies, the other(s) automatically get his share - even if you are divorced or separated, and regardless of what you write in your will.
This document changes that.
About this tenants in common agreement
This agreement serves two purposes.
First it “severs the joint tenancy”, so that each owner owns an identifiable share. This could be 50:50, or it could be any other ratio. That is legally valid, but will not change pre-existing obligations, for example, who is responsible for repaying the mortgage.
Secondly, it sets out the arrangements for division of the proceeds of sale of the property. Depending on the circumstances, that will be legally binding between the owners, but may not be binding against a third party, like a trustee in bankruptcy.
The agreement enables you to choose the ownership proportions or make arrangements for changing the proportions. For example, you may want a gradual increase in the share of one owner who is paying off a mortgage or parent-lender.
After you have signed this agreement:
- Your shares in the property are separate in law, so that a creditor of one cannot take the share of the other too.
- When you sell, the net proceeds are divided in the shares you have agreed.
- If one of you should die, that person’s share will pass according to his will or intestacy.
This document does not contain arrangements for managing your property because it may become a public document. We cover management arrangements very thoroughly in other documents. Have a look at:
Joint ownership agreement: holiday property regulate the share ownership and use of a house, flat or other property for holiday occupation among different owners
Joint ownership agreement: residential property to record the joint ownership of a single residential property. Where all the owners occupy the property at the same time.
Cohabitation (living together) agreement sets out living arrangements, such as responsibility for bills.
This document was written by a solicitor for Net Lawman. It complies with current New Zealand law.
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