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46/1995 Transfers - Joint Tenants to Tenants in Common


National Office Instruction

amending General Orders (1993 edition)

Instruction No. 46
Date of Effect: 11 December 1995




The purpose of this Instruction is to clarify the application of section 22 of the DSH Act in those cases where existing clients who hold title as joint tenants wish to rearrange the manner of their holding to tenants in common.


A discussion of a recent case with Westpac on the application of section 22 has highlighted the need for an Instruction to clarify certain aspects.

A Transfer of Ownership Application was received by a State Office with a request from the clients to transfer their existing joint tenancy into a tenancy in common. The clients' proposal was consistent with the changes introduced in the 1995 Budget and the application was approved. Subsequently, the Bank sought advice in respect of another client who wished to transfer from joint tenancy to tenants in common.

The 1995 Budget introduced changes to the DSH Act which now permit the Secretary to issue a Certificate of Entitlement for a subsidised advance to an eligible person who wishes to hold the property as a tenant in common. The co-tenant may be the eligible person's spouse, another eligible person (using pooled entitlements), or any other person. Section 17A sets out the requirements that have to be met if a Certificate of Entitlement is to be issued if the right or interest is in the form of a tenancy in common.

Section 22 is in Part III of the Act which includes section 17A. Accordingly, the requirements of section 17A apply to applications for a Certificate of Entitlement in respect of transfers of ownership. This is particularly critical when the application is to transfer the right or interest into the form of a tenancy in common.

Policy to be applied

In any case of a transfer to tenants in common, an application under section 22 must be made to determine:

  • that the subsidised loan benefit will only pass to the eligible person who originally obtained the loan; and
  • that the value of the eligible person's share or interest in the property is equal to or more than the amount of the subsidised loan.

Should an application be lodged by an ineligible spouse, it should be refused in accordance with subsection 22(3) of the Act. However, if the application is from the eligible person and the proposed value of the eligible person's share or interest is less than the amount of the subsidised loan, the application should be refused in accordance with paragraph 22(2)(a) because, in all the circumstances, it is not reasonable to approve the issue of a Certificate of Entitlement. The circumstance which is unreasonable is the non-compliance with subsection 17A(2) of the Act.

General Orders

The relevant Chapters of the Entitlement General Orders will be amended in the forthcoming update of the General Orders which takes into account the 1995 Budget changes.

Effect on previously issued NOIs (formerly COIs)

This Instruction further refines the policy enunciated in COI 31 and replaces that COI.

General Manager

4 December 1995