RENTAL PROPERTY OWNERSHIP

If a property is owned by 2 or more people, it can be owned as joint tenants or tenants in common. If joint tenants, then the obligations are joint and several, so that even if only one of the owners is sued, the creditor can take assets from either or both of the parties.  The upside though is that properties that are held as joint tenants automatically transfer to the other party upon death of one of the owners. This can be used as an asset protection strategy because no other party can make a claim for the property.

Tenants in common is used when an uneven ownership % is required, e.g, 80/20, or when a degree of asset protection is advised.

In this case, if one of the owners is sued, then the creditor can usually only pursue up to that % of the value of the asset. This is an area that I believe solicitors don’t give enough attention to when advising clients. It is far easier to get right at the beginning than changing it down the track.

Talk to your accountant about the implications of the property ownership.

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