When you purchase a residential or commercial property with one or more people, you will be asked to pick the ownership alternative. There are two popular types of residential or commercial property ownership in Singapore - joint tenancy and tenancy in typical.
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This post discusses both residential or commercial property ownership key ins Singapore and their pros and cons. It also highlights the differences between the 2 kinds of joint ownership. It will allow homebuyers to make a notified choice on the way of holding when purchasing a residential or commercial property with a co-owner. Furthermore, we will likewise discuss how you can change the ownership type.
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So, let's start with a quick intro of the ownership types with their benefits and drawbacks.

What is joint tenancy?

Joint occupancy 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 three other co-owners, each will own a 25% share.

In joint occupancy, you or other co-owner(s) are considered a single legal entity. All co-owners will have equivalent interest and rights, regardless of how much one owner adds to the residential or commercial property's purchase price. So, one owner can't toss out the other co-owners in any situation.

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

Joint occupancy is an appealing choice for married couples or other family members who want 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 comprehend it much better with an example.

Suppose there are 3 adult siblings and a $2 million residential or commercial property agreed upon joint occupancy amongst the parents and the eldest child at the time of purchase. After their parents' death, the residential or commercial property is automatically moved to the oldest boy since he is the only survivor of the co-owners. Even if the parents' will states otherwise, it becomes irrelevant here.

Pros of joint occupancy

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

It also helps avoid the delays and costs related to probate. So, if you and your spouse hold residential or commercial property together under a joint tenancy, she will immediately get the flat's ownership after your death.

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

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

Cons of joint occupancy

Lack of control. Under joint tenancy, all co-owners own the residential or commercial property rather than their individual shares. It indicates all co-owners have the same rights over the residential or commercial property, even if there is a significant 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 major part of the mortgage payments, costs or upkeep.

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

Potential tax implications. Joint occupancy can have tax ramifications for the surviving co-owner(s) upon the death of one co-owner. It is because 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 gift to relinquish their ownership completely. The co-owner who has actually transferred their stake will be treated as a first-timer, as they no longer own the residential or commercial property.

This is typically the case when a couple desires to own a second residential or commercial property without sustaining Additional Buyers Stamp Duty (ABSD). For instance, a better half can offer her share to her hubby and purchase a second residential or commercial property later without paying ABSD. She can then utilize the conserved amount for other home-related purchases, such as furnishings and/or home renovation.

Why is it hard to decouple a joint tenancy?

In Singapore, decoupling under a joint tenancy is a bit complicated. To decouple, you need to go through a legal severance, normally a divorce. You will require to reach out 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 the majority of situations. For an HDB residential or commercial property, you should connect to the HDB to understand whether you can or can not decouple it.

What is occupancy in typical?

Tenancy in typical is another type of ownership where each co-owner holds a particular portion share of the residential or commercial property, generally depending upon their contribution to the purchase cost. For instance, you might own 70% of the residential or commercial property while your sibling (another financier) owns 30%.

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

Tenancy in common is a popular option for organization partners or good friends who wish to invest together in a residential or commercial property but still wish to retain the freedom of selling or mortgaging their share of the residential or commercial property individually. Sometimes, couples who can not wed might likewise go for tenancy in common.

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

What happens to a joint occupancy when a co-owner passes away?

Upon the death of one owner, the shares of the co-owner(s) stay the exact same. Unlike joint occupancy, there is no right of survivorship. This indicates the departed owner's share will not automatically transfer to the surviving co-owner(s). It will be dispersed according to the instructions mentioned in the will.

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

Pros of occupancy in common

More flexibility. Unlike joint tenancy, tenancy in typical permits each co-owner to own a particular share of the residential or commercial property and hence enables higher flexibility in terms of financing and ownership arrangements. This type of ownership enables each owner to distribute or move their share of the residential or commercial property to whomever they desire by stating it in their will.

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

With tenancy in typical, you can likewise ensure 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 kids or sibling to acquire your share over your spouse after you pass away.

Allows decoupling. Unlike joint tenancy, decoupling is an uncomplicated procedure for tenancy-in-common. Decoupling enables co-owners or customers to purchase a 2nd 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 currently have strategies to buy a 2nd residential or commercial property later on, it is encouraged to divide the residential or commercial property 99-1 to minimize the Buyer's Stamp Duty (BSD) payable upon transferring your share to another co-owner.

Right to survive on the residential or commercial property. You may believe 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 home in a . However, it doesn't work like that.

Under occupancy in typical, all the co-owners have the right to reside in the residential or commercial property regardless of the size of their share. All legal decisions related to the residential or commercial property needs to be made collectively, even if a co-owner holds a little share.

Cons of occupancy in typical

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

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 want, it can lead to disagreements over the use and management of the residential or commercial property.

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

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

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

HDB homeowners are permitted to examine their manner of holding free of expense by logging into My HDBPage.

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

The table listed below highlights the key distinctions in between the two kinds of co-ownership of residential or commercial property in Singapore:

How does the ownership type affect your mortgage mortgage?

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

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

Note that what percentage of mortgage payment each co-owner is paying is a personal arrangement in between the co-owners or borrowers. The way 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 occupancy however wish to decouple it? Decoupling is rather complicated under joint tenancy. But here is fortunately: you can convert the manner of holding from joint occupancy to occupancy in common, and vice-versa.

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

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

For instance, if the ownership is split into 60-40, you need to transfer shares to make it 50-50 before you can apply to change to a joint occupancy. Note that this ownership transfer might draw in payment of stamp tasks as well.

If the residential or commercial property is still under a mortgage, you will require the permission of the lender bank before changing the manner of holding in the residential or commercial property.

The lender bank can not offer consent for the conversion. In such a situation, you should pay off the exceptional loan amount before using again for conversion in the way of holding.

How can you convert the manner of holding in Singapore?

In Singapore, the "conversion" of joint occupancy to occupancy in typical is done by lodging and signing up a copy of the Instrument of Declaration with the SLA. All the existing co-owners will need to sign a statutory statement before a Commissioner for Oaths to state their objective to hold the residential or commercial property as joint renters.

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

Note that this will incur legal charges, generally between $1,000 and $1,500. Otherwise, the co-owner(s) wishing to hold the residential or commercial property as renters in typical will sign the statutory declaration stating their intention as such. The lawyer will then duly serve the Instrument of Declaration on the other reluctant co-owner(s).

For personal residential or commercial property, you ought to consult a law office or residential or commercial property lawyer since the subsequent procedure and actions can be intricate.

For an HDB residential or commercial property, you need to either appoint your own solicitor or seek assistance from HDB directly to alter the way of holding.

Which type 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 on your personal scenarios and the reason you are purchasing the residential or commercial property. If you are getting a home with your spouse to stay in it with your household, both types of ownership should be adequate.

But if your objective behind purchasing a residential or commercial property with a spouse or relative is to ensure the residential or commercial property passes effortlessly to the making it through co-owner(s) in case among the owners passes away, joint tenancy may be the finest choice for you.

On the other hand, if you are an investor or acquiring the residential or commercial property with another financier or good friend for higher flexibility and generating rental earnings or selling for gains, then occupancy in common might 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 totally free to do so.