Joint Tenants vs Tenants in Common and Buying Your Home
Many people don’t purchase a home by themselves. Many times they are purchasing a home with a spouse, family member or friend. Often they are surprised when asked the question about how they would like to own the home; Joint Tenants vs Tenants in Common.
What are the differences between Joint Tenants and Tenants in Common?
When title is held in Joint Tenancy, all co-owners must take title at the same time; and they own equal shares. After a joint tenant dies, the surviving Joint Tenant(s) receives the deceased’s share. If only one tenant remains they now own 100% of the home.
When title is held as Tenancy in Common each tenant in common owns a specified interest in the property. It need not be equal. For example, one owner might own a 50% interest, another could own a 10% interest and a third tenant in common could own a 40% share.
Joint Tenancy Advantages and Disadvantages
In a joint tenancy situation, when one of the joint tenants dies, his or her interest automatically passes to the surviving joint tenant(s). This allows the surviving joint tenant(s) to avoid probate.
Advantages to owning a home as Joint Tenants is that probate costs and delays are avoided when a joint tenant dies. The surviving joint tenant(s) usually needs only record an affidavit of survivorship and a certified copy of the death certificate to clear the title.
Disadvantages of Joint Tenancy is that the surviving owners are subject to the liabilities of creditors and liens on the home. For example, if one of the joint tenants is held liable in a civil law suit, the plaintiff or creditor may force the sale of the entire property.
Tenancy in Common Advantages and Disadvantages
A major advantage is that each tenant in common can sell or pass their interest by will to whoever he or she wishes. For example, if three individuals own equal shares (approx. 33%) in a property and one owner decides to sell, that individual has the right to sell his/her 33% ownership without impacting the ownership of the other two individuals.
Disadvantages of Tenancy in Common are that they are subject to probate costs and delays and that a co-owner could end up with partial ownership of a property with a complete stranger if the shares from an initial owner are sold.
Another disadvantage is that a tenant in common can bring a partition lawsuit to force a property sale if the other co-owners are unwilling to sell. The court can then order the property sold, with the proceeds split among the co-owners according to their ownership shares.
Joint Tenants vs Tenancy in Common Final Thoughts
As you can see, there are advantages and disadvantages to owning a home as either Joint Tenants or Tenancy in Common. Each individual and circumstance is different and it is important to understand what will work best for you. I suggest to each of my clients who is unsure or would like additional information to consult an attorney about your individual case. The laws around property ownership are constantly changing and its important to have the most up-to-date information available.
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