The important differences between ‘tenants’ and ‘tenants in common’.
The REIQ vacancy rates, released this week, revealed that Gladstone’s rental market finished 2018 holding steady, at 4.2 per cent.
This market has completed a year of stability and while the level is a little weaker than we would like, it’s vastly improved from levels only a year or so ago.
So with this scrutiny on our rental market I thought it might be good to explore some terms that relate to the rental market but that are often confusing.
Although they sound the same, ‘tenants’ and ‘tenants in common’ are two very different terms. One describes how a property is occupied and the other how a property is owned.
Tenants are people or companies who lease a property. The rules and regulations for this are set out by the Residential Tenancies and Rooming Accommodation Act 2018 as well as the Property Occupations Act 2014.
When tenants choose to co-lease a property it is important each tenant clearly understand their responsibilities and obligations under the Act. In a co-lease situation are parties are equally responsible for the lease. In the event that the relationship fails and one tenant leaves the remaining co-tenants are held responsible for the rent and any damage to the property. Before signing any lease, tenants should take due care to ensure they are made aware of all listed tenants and occupants on a lease. Once signed the lease is a legally binding document and it is not easy to amend simply due to oversight.
Tenants in Common describes the type of ownership of property with more than one owner. This is commonly used for ownership splits for tax advantages and control of the asset. For example, one partner may retain 70% ownership while the other holds 30%. Joint tenants is another term used to describe property ownership. Similar to tenants in common, the difference is that all owners must have an equal share. There are also other legal considerations too for owners so it is important to have this organised prior to any purchase as it will also be reflected on the title. In this instance, buyers and property owners should seek independent legal advice about an ownership structure which is appropriate to their situation.