My HDB: Joint tenancy or Tenancy-in-common?

Should you hold your HDB or property in Joint Tenancy or Tenancy-in-Common? Which is better? This article takes you through both methods and will help you evaluate which of the two suits your needs
Alvin T'ngThu Aug 05 2021

Joint tenancy and tenancy-in-common are the two most common methods of owning a property. The main difference between the two is that joint tenancy has a right of survivorship, whilst tenancy-in-common does not. ## Tenancy-in-common Where a property is held via tenancy-in-common, owners own percentages of the total property. The percentages have to add up to 100%. For example, if a HDB is owned by person A and person B with person A owning 30% and person B owning 70% of the HDB, then that HDB is owned via tenancy-in-common. Tenancy-in-common can be of two types: equal or unequal shares. A property held in equal shares would mean that both owners have an equal interest in the property. A property held in unequal shares simply means that the owners do not have an equal interest in the property. The proportions may be decided by the owners as long as the total percentages add up to 100%. However, both owners are free to use the entire property regardless of their share. ### Distribution of Property held via Tenancy-in-Common: Where an owner of a property held via tenancy-in-common passes away, his share in the property is distributed according to his will or according to the laws of succession. With a HDB held via tenancy-in-common, the interest that you own in the HDB may be distributed according to a will (where you have one) or according to the Intestate Succession Act [1] (where you don’t).

If a will exists:

If you have a will, it must be verified and validated by the Court (through a process called probate) after which the ownership of your HDB can pass according to it. Using a will you can distribute your assets the way you wish [2]. When executing the will, you must be above the age of 21 and of sound mind. When distributing your interest in a HDB, do note that some restrictions exist - your intended beneficiary must be eligible to inherit the HDB. (refer to section: Eligibility Conditions when Distributing a HDB by Will)

In the absence of a will:

If you do not have a valid will when you pass away, your HDB will be distributed according to the Intestate Succession Act [3]. Some common cases are listed below: 1. If the deceased owner was married and does not have parents or children: property passes on to spouse [4]. 2. If the deceased owner was married with children: property passes to spouse and children equally. (50%-50%) [5] [6]. 3. If the deceased owner was married without children: property passes to spouse and parents equally. (50%-50%) [7]. 4. If the deceased owner was single without any children: property passes on to parents [8]. ### Eligibility Conditions when Distributing a HDB by Will: There are some eligibility requirements that your intended beneficiary must meet before inheriting your HDB flat. The person you choose must be your immediate family member like your spouse, parents, children or siblings. He/she must also be at least 21 years old and either a Singapore Citizen or a Singapore Permanent Resident. He/she cannot be the owner of an existing HDB flat or the main occupier of another flat. If the person you choose owns private property he/she can only take the ownership of your HDB if the requisite minimum occupation period is fulfilled, and if he/she is a Singapore citizen and continues to live in the flat after inheriting the flat [9].  ### Mortgage on property: What happens to your mortgage after you die depends on how your mortgage is structured. With tenants-in-common each tenant might have their own mortgage for their percentage of the ownership of the property. Generally any debts and liabilities that you have your executor will first settle and then your assets can be distributed. With regard to your HDB, your executor first needs to pay off your mortgage and only then can your HDB be distributed via your will or by intestate succession laws. To discharge your mortgage, your executor may exercise his power of sale to sell some of your assets and this includes your HDB [10]. Which assets that the executor sells, would generally be up to your appointed executor. ## Joint tenancy: Where a property owned by multiple owners is held via joint tenancy, the owners do not hold the property in proportions - all owners own the property jointly. Importantly, where a property is held via joint tenancy, the rule of survivorship applies. ### Distribution of Property held via Joint Tenancy: The rule of survivorship Where an owner of a property held via joint tenancy passes away, the property goes to the remaining surviving owners to be similarly held via joint tenancy (if there are more than 2 owners) or goes to the surviving owner to hold in its entirety (if there are only 2 owners). This is the right of survivorship. Because of this right, when you pass away, the property is not considered part of your estate and cannot be used to pay off your other liabilities nor will it be an asset that can be distributed via a will, or by intestate succession laws. ### Eligibility Conditions There are no eligibility concerns in the case of joint tenants because the surviving owner is already an owner and therefore already fulfills all the eligibility conditions to hold a HDB. ### Mortgage on property With joint tenants, your mortgage usually will be in both your names. On your death, the responsibility of your mortgage passes on to your co-owner. If the surviving owner cannot service the mortgage then the bank can take possession of the property and can sell it to fulfil the mortgage. ## Joint Tenancy and the Danger of Unfair Distributions Under joint tenancy, when the property passes on to your co-owner via the right of survivorship, he/she can deal with the property however they like. On the death of your co-owner, the property will either be passed according to their will or according to succession laws which prioritises the family of the co-owner. For example, in the scenario where person A and person B are married without kids and own a HDB under joint tenancy, when person A passes away the property will be wholly owned by person B. If subsequently, person B dies without leaving a will, the property will pass to person B’s parents according to Intestacy law. Person A’s parents and extended family will be left unaccounted for in the final distribution of the HDB. This problem can be resolved by using mirror wills. Mirror wills are ordinary wills that have similar distributions as each other. For couples holding their HDB jointly this is a solution to prevent unfair or unintended distributions of property. In a mirror will, both person A and person B have a will with similar distributions. For example, both wills could state that one spouse wishes to leave the HDB to the other upon their death, and where the spouse passes away before him/her, then the HDB would be left to their children. If there are no children, both person A and person B’s will could leave the estate to both their parents or any third party mutually agreed. Mirror wills ensure that the wishes, and the extended families of both person A and person B are accounted for when the HDB is finally distributed [11]. ## Joint Tenancy vs Tenancy-in-Common:  If your HDB is held via tenancy-in-common, you have the flexibility to hold it in different shares according to your preference. This is ideal if you are sharing your HDB with a friend however for couples this is not the most ideal option. As above, the main difference between holding your HDB in joint tenancy and tenancy-in-common is the principle of survivorship that applies to joint tenancies. This principle may be beneficial if you have an increased amount of liabilities and debts. If you and your spouse own a HDB via tenancy-in-common and you pass away, your share of the property can be sold off to cover your liabilities as it would form part of your estate. However, note that it would be difficult to sell your share, and your spouse may have to also sell her share. By contrast, if you and your spouse owns your HDB via joint tenancy, the entire property will pass to your spouse upon your death via the principle of survivorship and will not form part of your estate. Hence, your HDB cannot be sold to fulfil any liabilities that you may have. ## Converting the manner of holding: You can change the manner in which you hold your HDB from joint tenancy to tenancy-in-common. If you hold your HDB via tenancy-in-common you also have the option to change the shares in which you hold the HDB from unequal to equal shares or vice versa using an application form [12]. A change in the manner of holding from joint tenancy to tenancy-in-common or vice versa requires that the tenancy-in-common be in equal shares. The option of unequal distribution of shares is not available when converting the ownership. For example, if person A and person B hold their HDB via tenancy-in-common in a 40:60 proportion of shares then they will first need to change this to a 50:50 proportion and only then can they change their manner of holding to joint tenancy. Conversely, if person A and person B hold their HDB via joint tenancy when they convert it to tenancy-in-common it will be in equal shares (50:50 proportion) and then if they want to they can change the proportion using the application form. If the property is under a mortgage, you will need to get the consent of the bank before you convert the holding in the property. ## Make your will today! As seen above, the main difference between holding a property via joint tenancy and tenancy-in-common is the right of survivorship. Both have the manners of holding have their own advantages and considerations that you must evaluate before making a decision. While under joint tenancy your HDB won’t form a part of your estate at all, under tenancy-in-common you will need to make provisions in your will on how you would like the ownership of your HDB distributed. Making a will can be overwhelming but WillCraft can help. Our services involve a simple and inexpensive process which allows you to customise your will from the comfort of your own home. Our service is full featured and covers up to 10 million will permutations. Create your will with WillCraft today! _ [1] The rules of succession are different for Muslims. Succession to Muslim estates is governed by Muslim Intestate law called faraid, the administration of which is dealt with statutorily in the Administration of Muslim Law Act. [2] Except your CPF. CPF funds cannot be distributed using your will. You must make a CPF nomination which lets you choose who gets your savings and in what proportion. In the absence of a nomination, your savings will be distributed according to succession laws. [3] Intestate Succession Act, s7. [4] Intestate Succession Act, s7 Rule 1.  [5] Intestate Succession Act, s7 Rule 2. [6]Intestate Succession Act, s7 Rule 3: If the deceased owner had multiple children, the property is distributed equally to all. If a child is dead, his share goes to the individual who legally represents the children.  [7] Intestate Succession Act, s7 Rule 4. [8]Intestate Succession Act, s7 Rule 5. [9]For more information please refer to: https://www.hdb.gov.sg/cs/infoweb/residential/living-in-an-hdb-flat/changing-owners-occupiers/transfer-of-flat-ownership/eligibility [10] Probate and Administration Act, s58. [11] For more information please refer to:https://www.willcraftnow.com/posts/mirror-wills-and-why-they-may-be-right-for-you [12] For information visit: https://www.hdb.gov.sg/cs/infoweb/residential/living-in-an-hdb-flat/changing-owners-occupiers/change-in-manner-of-holding-ownership-proportion

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