When you purchase a residential or commercial property with one or more people, you will be asked to choose the ownership alternative. There are two popular types of residential or commercial property ownership in Singapore - joint tenancy and occupancy in common.

This post discusses both residential or commercial property ownership types in Singapore and their advantages and disadvantages. It likewise highlights the distinctions in between the 2 types of joint ownership. It will allow homebuyers to make an informed decision on the way of holding when purchasing a residential or commercial property with a co-owner. Furthermore, we will likewise go over how you can change the ownership type.
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So, let’s begin with a quick introduction of the ownership types with their benefits and drawbacks.

What is joint occupancy?

Joint tenancy is a type 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 instance, if you and your partner 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 tenancy, you or other co-owner(s) are thought about 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 rate. So, one owner can’t toss out the other co-owners in any circumstance.

Under this type of ownership, the residential or commercial property might just be offered or mortgaged as one system. Therefore, neither you nor other co-owners can make a unilateral choice on issues like offering off or mortgaging the residential or commercial property.

Joint tenancy is an attractive alternative for married couples or other relative who want to own residential or commercial property together. Note that it is the ‘default’ holding choice on the agreement when a couple purchases their home.

Let’s comprehend it much better with an example.

Suppose there are three adult brother or sisters and a $2 million residential or commercial property agreed upon joint occupancy among the moms and dads and the eldest kid at the time of purchase. After their parents’ death, the residential or commercial property is automatically transferred to the eldest son since he is the only survivor of the co-owners. Even if the parents’ will states otherwise, it ends up being irrelevant here.

Pros of joint tenancy

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

It likewise assists avoid the hold-ups and costs associated with probate. So, if you and your wife 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 simple to understand, and the right of survivorship gets rid of the requirement for complex legal plans or estate planning.

Protection from financial institutions. In joint tenancy, each owner’s share is protected from their specific creditors. It implies that if one co-owner sustains a debt, their lenders 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 instead of their private shares. It suggests all co-owners have the very same rights over the residential or commercial property, even if there is a substantial difference in the financial 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 portion of the mortgage payments, bills or maintenance.

Limited estate planning. Under the right of survivorship, the residential or commercial property passes automatically to the making it through co-owner(s) without requiring a will or probate. This makes it hard to make sure that the residential or commercial property passes to the designated beneficiaries after the death of the enduring co-owner(s).

Potential tax implications. Joint occupancy can have tax implications 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 purposes.

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 totally. The co-owner who has moved their stake will be dealt with as a first-timer, as they no longer own the residential or commercial property.

This is typically the case when a couple wishes to own a second residential or commercial property without sustaining Additional Buyers Stamp Duty (ABSD). For instance, a wife can sell her share to her hubby and purchase a second residential or commercial property later on without paying ABSD. She can then utilize the saved quantity 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 complex. To decouple, you must go through a legal severance, generally a divorce. You will require to reach out to a residential or commercial property attorney to sign an Instrument of Declaration and after that lodge it with the Singapore Land Authority (SLA).

Note that decoupling is only possible for private residential or commercial properties in a lot of scenarios. For an HDB residential or commercial property, you should reach out to the HDB to understand whether you can or can not decouple it.

What is tenancy in typical?

Tenancy in typical is another form of ownership where each co-owner holds a particular percentage share of the residential or commercial property, usually depending upon their contribution to the purchase price. 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 plainly divided, you may sell or mortgage your part to a third party without requiring the permission of other co-owners. You can likewise leave it for another person or third-party of your choice in your will.

Tenancy in typical is a popular choice for business partners or good friends who wish to invest together in a residential or commercial property but still wish to keep the freedom of selling or mortgaging their share of the residential or commercial property individually. Sometimes, couples who can not wed may also go for tenancy in common.

Taking the very same example as above, if the residential property was agreed upon tenancy in typical, the youngest kid could challenge the eldest boy around what is in the will. In such a scenario, the residential or commercial property would be dispersed according to the will.

What happens to a joint occupancy when a co-owner dies?

Upon the death of one owner, the shares of the co-owner(s) stay the same. Unlike joint tenancy, there is no right of survivorship. This indicates the deceased owner’s share will not immediately move to the enduring co-owner(s). It will be distributed 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 based on the arrangements of the Intestate Successions Act.

Pros of occupancy in common

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

Freedom to sell or mortgage. This type of ownership enables each co-owner to sell or mortgage their share of the residential or commercial property independently without requiring authorization or approval from the other co-owners.

With tenancy in common, 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 enables you to prioritise your kids or sibling to acquire your share over your spouse after you die.

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

All you need 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 total. If you currently 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 minimize the Buyer’s Stamp Duty (BSD) payable upon transferring your share to another co-owner.

Right to live 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 home in a dispute. However, it does not work like that.

Under tenancy 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 defense from financial institutions. Unlike joint occupancy, occupancy in common does not protect the co-owners from the creditors of specific owners. This suggests that if one owner incurs a financial obligation, your share in the residential or commercial property can also be seized by their lenders.

Potential for Conflict. Tenancy in common can create dispute between the co-owners. Since each owner has the capability to offer or mortgage their share of the residential or commercial property as they wish, it can cause disputes over the use and management of the residential or commercial property.

For example, if a co-owner desires to sell 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 examine the kind of ownership of my residential or commercial property?

For personal residential or commercial property, house owners can acquire info 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 allowed to inspect their manner of holding totally free of cost by logging into My HDBPage.

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

The table listed 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 used up a mortgage loan to finance your home purchase, all co-owners have joint liability for the mortgage. If one owner passes away, the other co-owner(s) are still accountable to repay the mortgage, or the bank will foreclose on the residential or commercial property.

When figuring out mortgage eligibility, banks are just worried about your Total Debt Servicing Ratio (TDSR) and Mortgage Servicing Ratio (MSR). The ownership type - be it joint tenancy or occupancy in typical - does not affect your mortgage approval.

Note that what percentage of mortgage payment each co-owner is paying is a private contract between the co-owners or debtors. The way of holding makes little distinction when it concerns mortgage loans.

Can I change from joint occupancy to occupancy in common?

What if you currently have a joint tenancy however desire to decouple it? Decoupling is somewhat complicated under joint tenancy. But here is the bright side: you can transform the manner of holding from joint tenancy to occupancy in typical, and vice-versa.

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

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

For example, if the ownership is divided into 60-40, you should move shares to make it 50-50 before you can apply to switch to a joint occupancy. Note that this ownership transfer might bring in payment of stamp duties also.

If the residential or commercial property is still under a mortgage, you will need the consent of the loan provider bank before changing the manner of holding in the residential or commercial property.

The loan provider bank deserves to not provide authorization for the conversion. In such a circumstance, you need to pay off the impressive loan quantity before using again for conversion in the way of holding.

How can you convert the way of holding in Singapore?

In Singapore, the “conversion” of joint tenancy to occupancy in common is done by lodging and registering 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 tenants.

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

Note that this will sustain legal fees, usually in between $1,000 and $1,500. Otherwise, the co-owner(s) wishing to hold the residential or commercial property as occupants in typical will sign the statutory declaration mentioning their intention as such. The lawyer will then appropriately serve the Instrument of Declaration on the other unwilling co-owner(s).

For personal residential or commercial property, you must seek advice from a law office or residential or commercial property lawyer since the subsequent procedure and actions can be complex.

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

Which type of ownership is ideal for you?

Both joint occupancy and occupancy in common have their own advantages and disadvantages. What will work much better for you depends upon your personal scenarios and the reason you are buying the residential or commercial property. If you are getting a home with your partner to remain in it with your household, both types of ownership should be adequate.

But if your goal behind buying a residential or commercial property with a partner or member of the family is to ensure the residential or commercial property passes perfectly to the making it through co-owner(s) in case one of the owners passes away, joint occupancy might be the best option for you.

On the other hand, if you are a financier or acquiring the residential or commercial property with another financier or good friend for higher flexibility and generating rental income or costing gains, then tenancy in common might be more apt. Moreover, if you ever require to sell your share of the residential or commercial property to meet any financial requirement, you will be completely totally free to do so.
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