If you are looking to buy and own property with others, you’ve probably heard of the term joint tenancy. Joint tenancy and tenancy in common are the two most common categories of ownership of a property. While they may sound alike, they are not the same thing. Today, the Davidson Law Group explains the basics of these types of shared ownership, including their differences.
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Tenancy in Common
Tenants in common may have different ownership shares — although none of the owners may take a particular area of the property. For instance, if three tenants own a property, two of them might each own 25% of the home, while the third tenant owns 50%. Tenancies in common may also be acquired at different times. Therefore, an individual can obtain a stake in the property many years after other people have engaged in a tenancy in common ownership.
A tenancy in common can be dissolved if one or more co-tenants buy out the others, if the property is sold and the earnings are distributed amongst the owners, or if a partition is filed, allowing a beneficiary to sell their share. At this time, former tenants in common can decide to enter into a joint tenancy by a written instrument if they want.
Joint tenants, however, must acquire equal shares of the property with the same agreement at the same time. The terms are all defined in the deed or other legal property ownership documents. A joint tenancy can be disconnected if one of the tenants sells his or her interest to another person. This transfer changes the ownership to a tenancy in common arrangement for all parties.
Rights of Survivorship
One of the main differences between joint tenancy and tenancy in common is what happens to the assets when one of the owners passes. When joint tenants own a property, a deceased owner’s interest immediately gets transferred to the surviving owners. For instance, if three joint tenants own a home, and one of them passes, the two remaining tenants each acquire a one-half share of the property. This is referred to as the right of survivorship, which can help evade the strenuous probate process and save time and money.
Tenants in common do not have rights of survivorship. Unless the decedent’s will clarifies that his or her interest in the property should be divvied among the surviving owners, their interest belongs to the estate.
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Discuss Your Options with Your Estate Attorney
There can be some difficulties with joint tenancy, such as exposing your property to the liabilities of others. It’s crucial to understand your options while you go through the estate planning process with the Davidson Law Group. We’re always here for our clients. If you live in Texas and you are ready to take control of your assets, contact our estate attorneys for a free consultation!