Property Ownership - Blended Families - Protection of Property
There are two ways for individuals to own property in New Zealand – either as Joint Tenants or as Tenants in Common.
When two people own a property as Joint Tenants and one owner dies, ownership of the property automatically transfers to the survivor of them, regardless of what the deceased’s Will says. This is called the law of survivorship. However, that might not be your intention if you have blended families or if you want to separately dispose of your share in the property. In those cases, a Tenants in Common (“TIC”) ownership structure could be more appropriate.
TIC describes the ownership of a property by two or more people in separate shares. It can be owned in any proportion you wish - the shares do not need to be equal. In this situation, when one owner dies, their share in the property is dealt with in accordance with the terms of their Will, rather than through the law of survivorship.
When owning a property as TIC, it is common for the parties to enter Life Interest Wills. This provides a right for the surviving partner to continue to occupy the property, subject to them paying all rates, insurances, and other outgoings. It is common for the life interest to end upon the death, remarriage and/or the entering into a defacto relationship of that surviving partner. At that time, the deceased’s share would then be distributed in accordance with the terms of their Will.
For example: Don and Kelly have two children each from previous relationships. They purchased their property in 2020 and own it as Tenants in Common in Equal Shares. In their Wills, Don and Kelly left a life interest in the property to each other, and the residuary Beneficiaries of their Estates are their respective children. Don died and his half share of the property was transferred to the Executors of his Estate, to be held on trust for the benefit of his two children, and Kelly is entitled to continue to occupy the property. The terms of the Will enable Kelly to sell the property (including the half share owned by Don’s Estate) and buy a subsequent property - including a Licence to Occupy in a Rest Home complex. Upon Kelly's death, the property will be sold; Don’s children will receive the proceeds of his half share, and Kelly 's children will receive the proceeds of her half share.
A TIC structure would also be recommended if you were to purchase a property with a friend or a family member to reflect each party’s contribution to the purchase price and/or where you wish to ensure your share is protected.
You can find further information regarding property ownership benefits and disadvantages in our insights Owning a property – what are the options? and Wills and Property Ownership and the effect on Residential Care Subsidies.
Please don’t hesitate to contact a member of our Property & Conveyancing team, or our Succession Planning & Estates team, to assist you with deciding the ownership structure that best suits your particular needs.