HOUSING MATTERS
Difference Between Joint-Tenancy & Tenancy-In-Common
Owning your own property is an exciting moment of your life. You finally have your own personal space which you are paying with your own money must be a satisfying feeling all around.
Nonetheless, in terms of ownership, there are two types when it comes to the ownership of a HDB flat. It is something important that you should take note of as it might as well save you from being kicked out of your own home.
What is Joint-Tenancy?
When you buy a HDB flat under the Public Scheme as a couple, there is a probability that it is a joint-tenancy agreement.
As the name suggests, it means that both you and your spouse equally owns the flat. Neither one of you has a bigger advantage when it comes to the ownership of the flat.
Upon the demise of either one of you, the other party will immediately fully own the flat.
Any legal beneficiaries of the deceased spouse are not able to claim from any part or ownership flat. It clearly means that the surviving spouse is the new owner of the property.
READ ALSO: Finding Out Who Owns The HDB Flat When You Passed On
What if the wife is paying a higher amount of mortgage? Does not that mean that she owns a higher share of the flat?
In terms of ownership, it is equal between husband and wife.
But even if the wife pays a higher amount monthly compared to the husband, it does not change the percentage of ownership of the flat.
The bank or HDB does not care about who is paying the mortgage as long as it is being paid back.
However, in a case where the flat is being sold, the wife will be receiving a higher return of sale of the flat (if the mortgage is financed via CPF).
The money will be returned to where it came from in the first place. If the money is coming from the wife’s CPF account, it will be returned to the wife’s CPF account.
What is Tenancy-In-Common?
Tenancy-In-Common is normally used by businesses or is a joint-investment on the property.
It is used, as it is an easier way for you to sell your share of the property.
Even when there are two co-owners, the ownership of the property may not be equal. Owner A can own 70% of the property and owner B may only own the remaining 30% of the property.
However, the death of one co-owner does not mean that the surviving co-owner will take ownership of the property.
The share of the property may be put in a will so the beneficiary can inherit the property. The surviving owner has no control of the choices or intention of the share.
READ ALSO: Key Things You Should Rethink Before Renovating Your First Home
If you are a Muslim, the Faraidh law does not apply when Joint-Tenancy is in place
Some of you might know what is Faraidh law. It is the division of assets to one’s legal beneficiaries in accordance with certain fixed calculations i.e. Muslim Inheritance Law. In Singapore, this is governed under the Administration of Muslim Law Act (AMLA).
However, if the ownership of your flat is Joint-Tenancy, Faraidh will not kick in.
Any rightful beneficiary of the deceased will not able to claim any part of the property. The property will be fully owned by the surviving spouse.
READ ALSO: As A Muslim, How Does Faraidh Division Work?
Will Faraidh be in place if it is Tenancy-In-Common?
Yes, it will.
Following what was explained above about the distribution of a property which is under Tenancy-In-Common, it is will be the same.
The percentage of the property that the owner owns, will be distributed via Faraidh towards rightful beneficiaries.
Which will suit me better?
If you were a couple and wanting to start a family, going for Joint-Tenancy would be a better choice.
It will be an easier transition of ownership upon the demise of either husband or wife. It is pretty straightforward.
Tenancy-In-Common should only be chosen if the property is not for residential purposes.
Nevertheless, this type of decision should always be done with proper planning and decision making. As what you choose now, will definitely affect the outcome in the future.
That is the end of the article and hope the information is useful. Do share it with your friends and families. Till next time.
Disclaimer
I am a financial adviser but I am not your financial adviser. Therefore, what is posted on this website, are my opinions and NOT to be taken as financial advice. Information provided might be relevant at this period of time but may be irrelevant due to alterations to rules, regulations or policies. The information provided is true to the best of my knowledge, but there maybe omissions, errors or mistakes.
