reikit.com
Joint Tenancy vs. Tenants in Common: What's the Difference?

Get assurance with a thorough estate plan

Excellent

Jenn Morson

Contents

There are several ways to own residential or commercial property with another individual. Two methods to hold title together are joint tenancy and occupancy in typical arrangement. These types of real residential or commercial property ownership contracts each have benefits and drawbacks depending upon your individual needs and scenarios.

People might choose a joint tenancy or occupancy in typical agreement when they are a married or cohabitating couple, member of the family, service partners, investment partners, or perhaps roommates choosing to own residential or commercial property together. Whatever your reason, discovering the advantages and drawbacks of a joint occupancy vs. occupancy in typical contract will help guide you through the residential or commercial property ownership process.

Note that while the term "occupancy" is used in rental situations, in this context it describes ownership interest in a residential or commercial property. The owners in these arrangements would be referred to as joint tenants or renters in typical and are not tenants.

What is joint tenancy?

When 2 or more people acquire a residential or commercial property together with equal interest in the residential or commercial property and equal rights, this is described as joint tenancy. Perhaps the most common form of joint tenancy ownership is that of a couple.

In order to be considered joint tenancy, four conditions need to be met:

- The tenants need to acquire the residential or commercial property at the exact same time

• Equal residential or commercial property interest by each renter
• All tenants must get the title deed from the very same file
• Equal rights of ownership need to be worked out by all renters
  
  According to Gagan Saini, the director of acquisitions of JiT Homebuyer, a property solutions and investment firm in Metairie, Louisiana, a joint tenancy contract needs owners to agree on any choices about the residential or commercial property. "This consists of decisions such as when to sell the residential or commercial property, who is accountable for maintenance and repairs, and how the make money from the sale of the residential or commercial property are divided," Saini states.
  indymedia.org.uk
  Advantages of joint tenancy
  
  When you hold title in a joint tenancy, if among the co-owners dies, the ownership rights instantly transfer to the staying owner or owners. For example, if Bob and Cindy are married, and Bob passes away, Cindy will automatically become the complete owner of the residential or commercial property. There will be no need to go to probate, and Cindy will not owe any transfer taxes. If the residential or commercial property were owned in joint tenancy by single individuals, the staying owner or co-owners would likewise avoid the probate process, although they would need to declare the acquired residential or commercial property as a gift.
  
  The automated transfer of ownership to your co-owners, as described above, is referred to as the right of survivorship.
  
  Additionally, joint tenancy assurances equivalent rights and ownership for all celebrations. So if two people own the residential or commercial property, each controls 50%. If there were 5 owners, each would control 20% interest in the residential or commercial property.
  
  Disadvantages of joint tenancy
  
  Perhaps the most substantial downside of joint occupancy associates with financial institutions. If one of the occupants owes a financial obligation, a creditor has the power to terminate a joint tenancy even if the other co-owners have nothing to do with that financial obligation. If you are seeking joint occupancy with someone who has bad credit, considerable debt, or is vulnerable to liability by occupation, you will require to be mindful of these threats.
  
  If you do not want for your ownership to transfer immediately to the other owners and would instead it choose to go to your beneficiaries, joint tenancy is likewise not a great choice for you.
  
  Another disadvantage of joint occupancy is that if you and the other co-owners can not reach a contract on what to do with the residential or commercial property, you would require to file a claim, described as a partition action. Your co-owners would be needed to react to the partition action, which can be costly and time-consuming.
  
  What is tenancy in common?
  
  If several individuals hold title under occupancy in common, this indicates that each individual can select to sell their ownership interests in the residential or commercial property at any time. Unlike with joint tenancy, a tenancy in typical agreement permits several owners to own different percentages of the whole residential or commercial property. Although one renter might possibly own simply 30% of the residential or commercial property while the other owners own 35% each, this does not suggest that particular areas of the residential or commercial property are owned by those holding the bigger ownership portion. The entire residential or commercial property is offered to each owner, no matter percentage, and that is called concentrated interest.
  
  Additionally, on the celebration of their death, each co-owner might pick who will be the recipient of their ownership as part of their estate.
  
  A tenancy in common may likewise be described as a TIC contract. The acronym means tenancy in common.
  
  Advantages of occupancy in typical
  
  Under an occupancy in typical title, each owner does not require to have . So in theory, one owner could have 25% ownership while the other has 75%.
  
  This type of joint ownership is ideal for groups of people wanting to share residential or commercial property or couples who, for whatever factor, do not want their share of the residential or commercial property to move immediately to the making it through spouse upon their death. For instance, if a person marries a widow with children, the couple might want to collectively own residential or commercial property through occupancy in typical so that the widow can leave her share of the residential or commercial property to her kids instead of her spouse.
  
  Disadvantages of tenancy in common
  
  If you do not have a will and hold title through tenancy in common, your share of the residential or commercial property will be dispersed according to your state's probate laws. Under tenancy in common, there is no right of survivorship.
  
  If you share ownership through an occupancy in common title, your co-owners can sell their part without your say, suggesting that in theory owners might find themselves co-owning residential or commercial property with complete strangers. For example, if three roommates hold title under tenancy in typical and among the roommates chooses to offer their part of the ownership, the staying two roommates have no state concerning this choice.
  
  Joint occupancy vs. occupancy in typical
  
  The key differences between these 2 alternatives for residential or commercial property ownership are:
  
  Choosing which ownership works for you
  
  When choosing whether joint tenancy or occupancy in common is more fit for your needs, the primary step is to make sure you understand the distinctions between both of these co-ownership options. Choosing to own as tenants in typical vs. joint occupancy needs knowledge of both choices.
  
  According to Troy Robillard of Premiere Plus Real Estate in Fort Myers, Florida, no matter your circumstance, you will need to think about all the advantages and drawbacks of each structure in addition to seek advice from specialists. He states, "Whether you're a couple, company partners, or investors, choosing the suitable ownership structure needs mindful factor to consider of your goals and preferences. Consulting with a lawyer or real estate professional can offer invaluable assistance customized to your distinct scenarios, ensuring you make notified decisions that align with your long-term plans."
  
  This article is for informative purposes. This content is not legal advice, it is the expression of the author and has actually not been assessed by LegalZoom for accuracy or changes in the law.
  
  You might also like
  
  Company
  
  About.
  Careers.
  Contact.
  Investors.
  Press.
  Partner with us.
  Support
  
  Order status.
  Customer Care.
  Talk with a lawyer.
  Join our attorney network.
  Security.
  Discover more
  
  Business & Legal help resources.
  Business Name Generator.
  Legal kind templates.
  What is an LLC?
  How to Start an LLC?
  How to Change Your Name.
  What is a DBA?
  Most Profitable Small Business Ideas.
  What Is a Registered Agent?
  How to Conduct a Hallmark Search.
  How to Find Out if a Company Name is Taken?
  © LegalZoom.com, Inc. All rights reserved.
  
  LegalZoom provides access to independent lawyers and self-service tools. LegalZoom is not a law office and does not supply legal recommendations, except where authorized through its subsidiary law office LZ Legal Services, LLC. Use of our products and services is governed by our Terms of Use and Privacy Policy.