Finding out that how you hold your home’s title, not just whose name is on the mortgage, can shape your entire property settlement is a surprise for a lot of separating couples.
You’ve made the repayments, you’ve built a life in the property, and now you’re being told that the words “tenants in common” or “joint tenants” buried in your original purchase paperwork actually matter. It’s an easy detail to overlook when you bought the place together, and a genuinely stressful one to discover mid-separation.
The good news is that once you understand what each ownership type actually means, the path forward becomes much clearer.
Building on insights our Senior Associate Dannielle Young shared in our recent podcast on Tenants in Common v Joint Tenants, this guide breaks down exactly how each ownership type is treated in a property settlement, and what your options actually are.
This article is general information only and does not constitute legal advice.
Understanding Tenants in Common and Joint Tenants
Before exploring the impact on property division, it’s worth being clear on what each term actually means, since the form of ownership you choose when you first buy a property shapes everything that follows.
Tenants in common each hold an individual, defined share, or equal share, of the property, which can be equal or unequal, for example 50/50, 60/40, or any other split reflecting what each person actually paid.
Each person’s undivided share entitles them to possession of the whole property, not exclusive possession of any part of it specifically, and owners can dispose of, mortgage, or lease their own share independently, without the other owner’s agreement. There’s no right of survivorship, meaning ownership doesn’t automatically pass to the other owner if one of you dies.
Joint tenants hold the whole property together as a single, undivided form of ownership, with no individually defined share, each has an equal interest in the whole.
Joint tenancy and tenancy in common differ most clearly here: joint tenants can’t point to “their half” the way tenants in common can point to their percentage.
The defining feature of joint tenancy is the right of survivorship: if one joint tenant dies, their interest automatically passes to the surviving joint tenants, regardless of what their will says.
How Right of Survivorship Actually Works
The right of survivorship is worth understanding properly, since it’s the single biggest practical difference between the two ownership types, and it matters well beyond just estate planning.
Where property is held by 2 or more people as tenants in common, each person’s undivided share in the whole property, sometimes described as their share in the whole rather than a specific physical portion, is treated on death as part of their own asset. If a tenant in common dies, their share becomes part of their estate.
It doesn’t automatically pass to the co-owner, it’s an asset of the deceased estate, distributed according to their will, or under intestacy rules if they didn’t leave one, with the executor or administrator of the estate handling the transfer of that interest in the land.
A person who owns their share as tenant in common could, for instance, leave their 70% share of the property to their adult child from a previous relationship rather than their current partner, which is why this ownership type is often favoured in blended family or second marriage estate planning, where each person wants to preserve their own share for their own beneficiaries.
Good estate planning, ideally with input from estate lawyers alongside your family lawyer, should always account for how your share is held.
If a joint tenant dies, none of that applies. Their interest simply passes to the surviving joint tenants by operation of law, through right of survivorship, bypassing the will entirely, and ownership of the property is transferred to the surviving owner via a transmission application lodged with the relevant Titles Office rather than through probate.
This is often described as jointly and equally held property, since joint tenants hold the whole property together rather than a divided or undivided share each.
For capital gains tax purposes, the deceased’s interest is still treated as though it passed through their estate to the surviving owner, which matters if the property was the deceased’s main residence, since the surviving owner may still be entitled to the main residence exemption on the interest they’ve acquired.
The Impact on Property Division During Separation
Tenants in Common
In a separation or divorce, property owned as tenants in common allows for more straightforward division, since it already reflects each party’s defined share.
This ownership type is often favoured where parties want to maintain distinct financial interests, such as in second marriages, blended families, or investment properties bought with unequal contributions.
That said, “straightforward” doesn’t mean the stated share is automatically the final settlement outcome. A property settlement still weighs up financial and non-financial contributions made during the relationship and each party’s future needs, so a title showing an 80/20 split isn’t necessarily where the final financial settlement lands.
For more complex asset pools, our guide on complex property division covers how ownership structures like this fit into the broader four-step process.
Joint Tenants
Dividing property held as joint tenants can be more complex in a separation. The right of survivorship complicates matters, especially if one party wishes to retain the property, or if either party dies before the settlement is finalised.
Often, a legal process known as severance of joint tenancy is required first, converting the ownership to tenants in common, so the property can then be divided equitably rather than automatically passing in full to whichever party happens to survive the other.
How Does Severance of Joint Tenancy Actually Work?
Severance converts a joint tenancy into a tenancy in common, ending the right of survivorship and replacing it with defined, individual shares.
Severance can happen a few ways. Both parties can agree to sever the joint tenancy jointly, which is the simplest route to sever a joint tenancy.
Alternatively, in most Australian states, one tenant can unilaterally sever their interest in a co-ownership arrangement by lodging a transfer with the relevant Titles Office, converting their share into a tenancy in common without needing the other party’s agreement, shares can be equal or set at whatever proportion is agreed or ordered.
A joint tenancy can also be severed by a court order, or, in some circumstances, by one party selling or transferring their interest to a third party.
In Queensland, if joint tenants can’t agree and one wants to force a sale, an application can be made to the court under the Property Law Act 1974 (Qld) for an order of partition, allowing the sale to proceed even without the other owner’s consent.
Several other states, including New South Wales, South Australia and the Northern Territory, regulate land titles and severance under legislation still known as the Real Property Act, so the exact process and terminology for how to hold land as joint tenants, or sever that holding, can differ depending on where the property is located.
Once severed, each former joint tenant becomes a tenant in common, holding the property as tenants in common with their own defined share, typically equal unless otherwise agreed or ordered, and that share can then be dealt with separately in the property settlement, including being left to a beneficiary in a will rather than automatically passing to the other party.
From that point, each person is entitled to possession of the whole property as an undivided co-owner, rather than being entitled to exclusive possession of any single physical part of it, which is worth understanding before assuming you can simply “claim your half” of the house itself.
Navigating Property Division: Legal, Financial and Emotional Considerations
Legal Considerations
Understanding your legal rights under either ownership arrangement is crucial, and it’s always worth taking the time to seek advice before assuming you know how your particular type of property ownership works.
A family law consultation with Collective Family Law Group can provide valuable insight into how your specific ownership type affects your legal position in a property settlement, and whether severance or another step needs to happen first.
Financial Implications
The financial implications of property division vary significantly between the two ownership types.
Mortgage liabilities generally remain owed by both parties regardless of how the title is held, so it’s essential to consider outstanding loan balances, current property valuation, and the tax implications, including any capital gains tax or land tax consequences, of transferring or selling a share.
If either owner dies before matters are resolved, the outcome can differ dramatically depending on whether you were still joint tenants or had already become tenants in common, which is exactly why acting on this early, rather than leaving it for “later,” genuinely matters.
Emotional Factors
Property division can be emotionally charged, particularly where the family home is involved. Maintaining objectivity, and seeking professional advice rather than relying on informal arrangements between yourselves, helps you reach decisions that are both financially sound and emotionally sustainable.
What Happens to a Co-Owner’s Share If They Die Before Settlement Is Finalised?
This is a genuine, practical concern for separating couples who haven’t yet formalised their property settlement, and the answer depends entirely on how the title is held.
If you’re still joint tenants and one of you dies before a settlement, or before the joint tenancy has been severed, the surviving party generally still inherits the whole property automatically, by right of survivorship, regardless of what a will says or what informal separation arrangements were in place.
This is one of the strongest reasons family lawyers recommend severing a joint tenancy early in a separation, even before other property matters like a consent order are finalised, since it removes this risk entirely while the rest of the settlement is worked out.
Once severed, each share becomes part of that person’s own deceased estate if they die, distributed under their will or under intestacy law rather than passing automatically to the former partner.
Seeking Professional Guidance
Whether you’re a tenant in common or a joint tenant, the impact on property division in a relationship breakdown is significant, and getting the ownership structure sorted early makes everything that follows more straightforward.
At Collective Family Law Group, we’re here to guide you through every step of this journey, from working out whether severance is needed, through to negotiating or finalising your property settlement. Contact us today to book a consultation.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. For specific guidance, schedule a consultation with Collective Family Law Group.
Frequently Asked Questions
Can I change from Joint Tenants to Tenants in Common post-separation?
Yes. Parties can change the type of property ownership through severance, a legal process that can be crucial for equitable property division after separation, and in most states this can be done by one party alone, without needing the other’s agreement.
How does property division work for Tenants in Common in a divorce?
Property division for tenants in common typically starts from each party’s stated ownership percentage on the title, but the final settlement also weighs up contributions made during the relationship and each party’s future needs, so the eventual outcome may differ from the original share on title.
Is it necessary to sell the property in a divorce for Joint Tenants?
Not necessarily. Options like one party buying out the other’s share, converting to tenants in common so each party can deal with their share separately, or, in some cases, applying to the court for an order of sale, are all possible depending on your circumstances.
What is the definition of co-ownership?
Co-ownership is a general term describing any arrangement where two or more people hold an interest in the same property at the same time. In Australia, co-ownership takes one of two legal forms, joint tenancy or tenancy in common, each carrying different rights around survivorship, the ability to transfer your share, and how that share is treated if you die or separate.
