When you acquire a residential or commercial property with several individuals, you will be asked to pick the ownership choice. There are two popular types of residential or commercial property ownership in Singapore - joint occupancy and tenancy in typical.

This short article describes both residential or commercial property ownership types in Singapore and their benefits and drawbacks. It also highlights the distinctions between the 2 kinds of joint ownership. It will enable property buyers to make a notified decision on the manner of holding when buying a residential or commercial property with a co-owner. Furthermore, we will likewise go over how you can change the ownership type.

So, let's begin with a quick intro of the ownership types with their advantages and disadvantages.

What is joint occupancy?

Joint tenancy is a kind of ownership in which all co-owners of the residential or commercial property will have an equivalent stake in the residential or commercial property. For example, if you and your spouse own a residential or commercial property together, you both will have a 50% share of the residential or commercial property. Similarly, if you co-own a residential or commercial property with 3 other co-owners, each will own a 25% share.

In joint tenancy, you or other co-owner(s) are considered a single legal entity. All co-owners will have equal interest and rights, no matter just how much one owner adds to the residential or commercial property's purchase price. So, one owner can't kick out the other co-owners in any circumstance.

Under this kind of ownership, the residential or commercial property could just be sold or mortgaged as one system. Therefore, neither you nor other co-owners can make a unilateral decision on concerns like selling or mortgaging the residential or commercial property.

Joint occupancy is an appealing alternative for married couples or other relative who desire to own residential or commercial property together. Note that it is the 'default' holding choice on the contract when a couple purchases their home.

Let's understand it much better with an example.

Suppose there are 3 adult siblings and a $2 million residential or commercial property concurred upon joint occupancy amongst the parents and the eldest boy at the time of purchase. After their parents' death, the residential or commercial property is instantly transferred to the oldest child given that he is the only survivor of the co-owners. Even if the moms and dads' will states otherwise, it ends up being unimportant here.

Pros of joint tenancy

The right of survivorship. It is one of the most significant benefits of joint occupancy. If the occasion one co-owner passes away, his/her share of the residential or commercial property instantly passes to the surviving owner(s), regardless of whether there is a will or not.

It also assists avoid the hold-ups and expenses related to probate. So, if you and your spouse hold residential or commercial property together under a joint occupancy, she will instantly get the flat's ownership after your death.

Simple and simple. This ownership structure is easy to understand, and the right of survivorship eliminates the requirement for complex legal arrangements or estate preparation.

Protection from lenders. In joint occupancy, each owner's share is protected from their individual financial institutions. It indicates that if one co-owner incurs a debt, their lenders can not seize the co-owner(s) share of the residential or commercial property.

Cons of joint occupancy

Lack of control. Under joint occupancy, all co-owners own the residential or commercial property instead of their private shares. It indicates all co-owners have the exact same rights over the residential or commercial property, even if there is a considerable difference in the monetary contributions made by different owners.

So, you (being a co-owner) can not sell or mortgage your share of the residential or commercial property without the authorization of the other co-owner(s), even if you pay the significant portion of the mortgage payments, expenses or maintenance.

Limited estate planning. Under the right of survivorship, the residential or commercial property passes immediately to the making it through co-owner(s) without needing a will or probate. This makes it challenging to guarantee that the residential or commercial property passes to the desired beneficiaries after the death of the making it through co-owner(s).

Potential tax ramifications. Joint occupancy can have tax implications for the enduring co-owner(s) upon the death of one co-owner. It is due to the fact that the departed owner's share of the residential or commercial property to the enduring co-owner(s) is considered a gift for tax functions.

What is decoupling?

Decoupling is when one co-owner purchases over the share of another co-owner, or transfers their share to another co-owner by way of a present to relinquish their ownership completely. The co-owner who has transferred their stake will be treated as a first-timer, as they no longer own the residential or commercial property.

This is often the case when a couple desires to own a second residential or commercial property without incurring Additional Buyers Stamp Duty (ABSD). For example, a spouse can offer her share to her partner and purchase a 2nd residential or commercial property later without paying ABSD. She can then use the saved amount for other home-related purchases, such as furnishings and/or home restoration.

Why is it difficult to decouple a joint tenancy?

In Singapore, decoupling under a joint occupancy is a bit complicated. To decouple, you must go through a legal severance, typically a divorce. You will need to connect to a residential or commercial property legal representative to sign an Instrument of Declaration and then lodge it with the Singapore Land Authority (SLA).

Note that decoupling is only possible for private residential or commercial properties in most circumstances. For an HDB residential or commercial property, you should reach out to the HDB to know whether you can or can not decouple it.

What is tenancy in typical?

Tenancy in typical is another type of ownership where each co-owner holds a particular percentage share of the residential or commercial property, typically depending on their contribution to the purchase rate. For instance, you could own 70% of the residential or commercial property while your sis (another investor) owns 30%.

Since the shares in the residential or commercial property are clearly divided, you might sell or mortgage your portion to a third celebration without requiring the authorization of other co-owners. You can likewise leave it for another individual or third-party of your choice in your will.

Tenancy in common is a popular choice for organization partners or good friends who wish to invest together in a residential or commercial property however still want to retain the liberty of selling or mortgaging their share of the residential or commercial property independently. Sometimes, couples who can not marry may likewise choose tenancy in common.

Taking the exact same example as above, if the home was concurred upon occupancy in common, the youngest boy could challenge the oldest son around what is in the will. In such a situation, the residential or commercial property would be dispersed according to the will.

What takes place to a joint tenancy when a co-owner dies?

Upon the death of one owner, the shares of the co-owner(s) remain the same. Unlike joint tenancy, there is no right of survivorship. This means the deceased owner's share will not automatically transfer to the surviving co-owner(s). It will be distributed according to the directions specified in the will.

If there is no will, the deceased's share in the residential or commercial property will be administered to the beneficiaries according to the provisions of the Intestate Successions Act.

Pros of tenancy in common

More versatility. Unlike joint tenancy, tenancy in common enables each co-owner to own a particular share of the residential or commercial property and hence permits higher flexibility in regards to funding and . This type of ownership allows each owner to disperse or move their share of the residential or commercial property to whomever they want by stating it in their will.

Freedom to offer or mortgage. This kind of ownership enables each co-owner to offer or mortgage their share of the residential or commercial property individually without needing permission or permission from the other co-owners.

With tenancy in common, you can likewise guarantee that your share of the residential or commercial property will go to a specific person or third-party and not your co-owners by default. This allows you to prioritise your children or brother or sister to acquire your share over your partner after you pass away.

Allows decoupling. Unlike joint occupancy, decoupling is a straightforward process for tenancy-in-common. Decoupling allows co-owners or borrowers to buy a second residential or commercial property without paying ABSD.

All you require to do is offer your share of the residential or commercial property to the other co-owner(s) or a third-party, and the decoupling is complete. If you already have strategies to purchase a second residential or commercial property later on, it is encouraged to divide the residential or commercial property 99-1 to conserve on the Buyer's Stamp Duty (BSD) payable upon moving your share to another co-owner.

Right to survive on the residential or commercial property. You may think that if an owner has more share in the residential or commercial property, they can kick your or the other co-owners out of the house in a conflict. However, it does not work like that.

Under tenancy in common, all the co-owners can live in the residential or commercial property regardless of the size of their share. All legal choices associated with the residential or commercial property should be made jointly, even if a co-owner holds a small share.

Cons of occupancy in common

No protection from financial institutions. Unlike joint occupancy, tenancy in typical does not secure the co-owners from the financial institutions of specific owners. This implies that if one owner sustains a financial obligation, your share in the residential or commercial property can likewise be seized by their creditors.

Potential for Conflict. Tenancy in common can produce conflict in between the co-owners. Since each owner has the capability to sell or mortgage their share of the residential or commercial property as they wish, it can result in disputes over the usage and management of the residential or commercial property.

For instance, if a co-owner wishes to offer his/her share of the residential or commercial property to somebody else or will it to their company partner, there is nothing you can do about it.

How do I examine the kind of ownership of my residential or commercial property?

For personal residential or commercial property, property owners can obtain information about the kind of ownership by paying $5.25 for "Residential Or Commercial Property Ownership Information" through Integrated Land Information Service (INLIS).

HDB property owners are permitted to check their way of holding complimentary of cost by logging into My HDBPage.

What is the difference in between a joint tenancy and a tenancy in common?

The table below highlights the key differences between the two types of co-ownership of residential or commercial property in Singapore:

How does the ownership type impact your mortgage mortgage?

If you have actually used up a mortgage loan to fund your home purchase, all co-owners have joint liability for the mortgage. If one owner dies, the other co-owner(s) are still responsible to repay the mortgage, or the bank will foreclose on the residential or commercial property.

When determining mortgage eligibility, banks are only worried about your Total Debt Servicing Ratio (TDSR) and Mortgage Servicing Ratio (MSR). The ownership type - be it joint occupancy or occupancy in common - does not impact your mortgage approval.

Note that what percentage of mortgage payment each co-owner is paying is a private arrangement in between the co-owners or debtors. The manner of holding makes little difference when it pertains to mortgage loans.

Can I change from joint occupancy to tenancy in common?

What if you already have a joint tenancy but want to decouple it? Decoupling is somewhat made complex under joint tenancy. But here is fortunately: you can convert the way of holding from joint occupancy to occupancy in typical, and vice-versa.

Note that if you wish to convert your holdings from joint occupancy to occupancy in typical, both owners need to have a 50-50 share-no more, no less. For instance, if you and your spouse are co-owners but desire to change to occupancy in common, then every one of you will have to own/hold a 50% share of the residential or commercial property upon severance, no matter how much more you had actually paid in the residential or commercial property's purchase rate.

Conversely, you can switch from an occupancy in typical to a joint tenancy just if the share split is currently 50-50. This implies you may be needed to move part of your interest to the other co-owner(s) in order to make the shareholdings equivalent.

For example, if the ownership is divided into 60-40, you need to transfer shares to make it 50-50 before you can use to switch to a joint occupancy. Note that this ownership transfer may bring in payment of stamp duties as well.

If the residential or commercial property is still under a mortgage, you will need the consent of the lending institution bank before altering the manner of keeping in the residential or commercial property.

The lender bank can not give consent for the conversion. In such a scenario, you must settle the exceptional loan quantity before applying again for conversion in the way of holding.

How can you convert the way of keeping in Singapore?

In Singapore, the "conversion" of joint tenancy to tenancy in typical is done by accommodations and signing up a copy of the Instrument of Declaration with the SLA. All the existing co-owners will require to sign a statutory statement before a Commissioner for Oaths to specify their intent to hold the residential or commercial property as joint occupants.

When the conversion is agreed upon by all co-owners, they will sign the Instrument of Declaration stating their objective to alter the way of holding.

Note that this will sustain legal fees, generally between $1,000 and $1,500. Otherwise, the co-owner(s) wanting to hold the residential or commercial property as occupants in common will sign the statutory declaration specifying their objective as such. The solicitor will then appropriately serve the Instrument of Declaration on the other unwilling co-owner(s).

For private residential or commercial property, you ought to consult a law practice or residential or commercial property lawyer given that the subsequent treatment and actions can be intricate.

For an HDB residential or commercial property, you must either select your own lawyer or seek help from HDB directly to alter the way of holding.

Which kind of ownership is ideal for you?

Both joint tenancy and occupancy in common have their own benefits and drawbacks. What will work better for you depends upon your individual scenarios and the factor you are buying the residential or commercial property. If you are getting a home with your partner to stay in it with your household, both types of ownership ought to be enough.

But if your objective behind buying a residential or commercial property with a spouse or member of the family is to ensure the residential or commercial property passes effortlessly to the surviving co-owner(s) in case one of the owners dies, joint occupancy might be the finest option for you.

On the other hand, if you are an investor or acquiring the residential or commercial property with another investor or pal for higher versatility and creating rental income or costing gains, then tenancy in common could be more apt. Moreover, if you ever require to offer your share of the residential or commercial property to meet any financial requirement, you will be completely complimentary to do so.