When buying a home, many homeowners opt for co-ownership of the property. Some people assume that if they pass away, their estate will automatically inherit the property. However, this hinges on the type of co-ownership arrangement they choose.
To prevent potential real estate litigation, high costs, and wasted time, it is essential to grasp the differences between the two forms of co-ownership: tenancy in common and joint tenancy.
Tenants in Common
Tenancy in common occurs when two or more parties jointly own undivided interest in the property. Unlike joint tenants, tenants in common do not have a “right of survivorship.” This means that upon the death of a tenant in common, their share of the property passes to their estate and designated beneficiaries. It does not automatically transfer to the other tenants.
One advantage of being tenants in common is its flexibility. Co-owners can hold unequal percentages in the property, allowing the percentages to reflect their financial contributions or other considerations. Furthermore, each tenant in common retains the right to sell their share of the property without requiring consent from other co-owners.
Joint Tenants
Joint tenancy involves equal ownership of a property by two or more parties, with the crucial feature of the right of survivorship. In the event that one joint tenant passes away, their share of the property is transferred to the surviving co-owners.
Joint tenancy are more common among married or common law partners. This is because it ensures that the surviving spouse inherits the property upon the death of their partner. However, it can also lead to disputes, as each owner enjoys equal decision-making power. For example, if one owner would like to sell the property, all co-owners must provide consent.
It is worth noting that even if a property is initially held under joint tenancy, circumstances may arise where a court could “sever” the joint tenancy. This converts the joint tenancy into a tenancy in common arrangement, as demonstrated in cases such as Marley v. Saga.
Takeaways
Home buyers must consider how they want their ownership interests structured in the event of death. Choosing between tenant in common and joint tenants can be a confusing yet critical decision. As specialists in real estate litigation, we assist clients in navigating these complex issues to ensure clarity and protection of their property rights.
Whether you are a buyer or a concerned party asserting ownership rights, our team is dedicated to providing expert advice on your real-estate litigation concerns. Please contact us at any time with questions regarding your property rights.