Joint tenancy and tenancy in common are two of the most frequently used tenancy agreements when more than one person owns a property.

Joint tenancy means that two or more tenants have undivided interest in a property. They holding equal rights and obligations to the property.

When one of the tenants die, the other tenants absorb the decedent’s interest in the property. This is called a right of survivorship and helps avoid probate upon the death of a tenant.

This is one reason why it’s the most common tenancy among married couples.

One might find themselves in a joint tenancy if a parent conveys a property to them and one or more siblings as joint-tenants in a Transfer on Death Deed.

Or, a sole owner of a property might add a joint-tenant, like a spouse, with a Quit Claim Deed.

 A downside to joint-tenancy is that debt and legal actions against one joint tenant can expose the whole property to a lien, even if the other co-owners are not responsible for the debt.

Tenants-in-common is the default disposition if joint-tenancy or another tenancy is not referred to in a deed.

Tenancy in Common occurs when two or more tenants have a separate, distinct, and possibly unequal shares of the property.

One tenant may own half of the property and the other two tenants-in-common may each own a quarter.

This typically happens when tenants pass on their share to be split between grantees, but a grantor could also grant grantees separate and unequal shares of a property as tenants-in-common. For instance, a parent may decide that the child who put money and equity into their home while they were alive will receive a majority share of a 75/25 split of the home upon their death.

There is not a right of survivorship with tenants in common, so if Tenant A and Tenant B are Tenants-in-Common, and Tenant A dies, the property is now owned by Tenant B and Tenant A’s Heir(s). If Tenant A does not have a Will or Trust, the share of the property goes through probate court and is provided to or divided amongst their next-of-kin.

Sometimes, shares divided over generations results in many distantly-related persons owning different sized fractions of a property – which can make managing their individual shares tricky. You may be able to sell your share to a tenant-in-common, but would have a hard time finding someone who wants to buy 1/24^th of a property. An attorney with critical thinking and knowledge of estate planning can help avoid this fate.

However, this effect can be beneficial with properties such as cabins, where all of the heirs get to enjoy a property as tenants-in-common. Even though the share is divided, it effectually refers to the value of the property, either in determining assets or if the property is sold. Tenants can sell, transfer or borrow against their shares of the property without the consent of other tenants, but all tenants have a right to possess and use the entirety of the property.

Knowing which type of tenancy is best for you and your property can be tricky, but we’re here to help! Click here to schedule your free estate planning consultation today.