You may be surprised to know that there are different ways in which multiple people can own real property together. Plus, each way has its own requirements and implications. Generally, there are three main types of property ownership involving multiple owners: tenants in common, joint tenants, and tenants by the entirety.
Tenants in Common
Owning property as tenants in common is probably the most common way in which multiple people own property together. In fact, it is often considered the default status when multiple owners are involved. Tenants in common have an undivided interest in the property, meaning that regardless of what percentage of the property each owner owns, each owner has a right to possess the entire property.
A tenant in common may transfer his or her interest in the property to another person through a will, a deed, or intestate succession (when property passes without a will). The person that receives the tenant in common’s interest in the land becomes the new tenant in common.
Say, for example, that Ashley and Bobby own land as tenants in common. However, Ashley decides that she no longer wants to own any part of the land so she sells her ownership interest to Charlie through a deed. Therefore, Ashley is no longer an owner of the land, and now Bobby and Charlie own the property as tenants in common.
A person who owns property as a tenant in common can ask a court to partition the property and end the tenancy in common. One type of partition is a partition in-kind. In a partition in-kind, the court divides the property and each owner gets his or her own share of the land. Another option is a partition by sale, where the court orders the land to be sold. After the sale, the tenants in common divide the money received.
A joint tenancy is often more difficult to create than a tenancy in common because there are certain requirements that need to be met. The intent to create a joint tenancy must be clear, since it is usually not considered to be the default tenancy. Examples of a clear intent could be language in a deed that says, “property to Ashley and Bobby as joint tenants,” or “property to Ashley and Bobby as joint tenants with the right of survivorship.”
Furthermore, for a joint tenancy to be formed, the joint tenants usually need to receive their interests in the land at the same time and through the same way, such as through the same deed or the same will. Also, joint tenants usually need to own the land in equal shares, and like a tenancy in common, each joint tenant has the right to possess the entire property.
A joint tenant can end a joint tenancy by selling or gifting his interest in the land. When that happens, the new owner of the interest and the other joint tenant become tenants in common. In addition, a joint tenant can also petition the court for a partition.
Unlike tenants in common, joint tenants have a right of survivorship. The right of survivorship is an important characteristic of a joint tenancy because it means that when a joint tenant dies, his or her interest in the land automatically goes to the surviving joint tenant(s). Therefore, if there is only one surviving joint tenant, that joint tenant can become the sole owner of the property.
A joint tenant’s interest in the land cannot be passed through a will or intestate succession because the right of survivorship automatically kicks in when the joint tenant dies.
Tenants by the Entirety
A tenancy by the entirety is similar to a joint tenancy. Tenants need to receive each of their interests at the same time and through the same way, and they need to own the land in equal shares with the right to possess the entire property. Also like a joint tenancy, the right of survivorship exists in a tenancy by the entirety.
However, unlike both a tenancy in common and a joint tenancy, a tenancy by the entirety can usually only be created between spouses. (Yet, that can vary by state.) Furthermore, only some states recognize a tenancy by the entirety. For example, Maryland not only recognizes tenancies by the entirety, but it also presumes a married couple owns property as tenants by the entirety.
States also vary on how a tenancy by the entirety can end. Some states require both spouses to end the tenancy or petition the court for a partition, while others require only one spouse to do it. In a state where marriage is required for property to be held as a tenancy by the entirety, such as Maryland, a divorce will end the tenancy because the tenants are no longer married and the tenancy by the entirety can only be between spouses. In that case, the former tenants by the entirety usually become tenants in common.
Although the above types of property ownership tend to be the most common, each state has its own laws regarding property ownership, so there are variations to the requirements and implications mentioned above. Furthermore, some states may not recognize the types mentioned above or may have additional ownership methods. For that reason, it is important to consult an attorney to help you figure out the implications of your type of property ownership based on the applicable state laws. The attorneys at Patriots Law Group have extensive experience in real estate litigation. Call 301-952-9000 for help today!
DISCLAIMER: The information above is for informational purposes only and is not intended to serve as legal advice for any particular situation. No attorney-client relationship is intended or created by this information and may not be relied upon based on the above-statements. Each individual situation is different and therefore a consultation is necessary before any advice can be relied upon as appropriate and accurate for your situation. Please call Patriots Law Group at 301-952-9000 to set up a consultation if you wish to obtain specific legal advice concerning your situation.