Joint Tenancy vs. Tenancy-in-Common
When purchasing property, there are many factors to consider before signing the final purchase agreement. While factors like closing dates, inspections, and subjects are commonly considered, many buyers do not consider other ways in which they can own their property. As experts in real estate law, the team at Linley Welwood knows that the type of ownership you choose will have a significant effect on selling the property, estate distribution, and potential disputes. That is why we have compiled some information outlining the differences between joint tenancy vs. tenancy-in-common to help you understand what each option entails.
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What is Joint Tenancy?
Joint tenancy means that two or more people own property in equal undivided portions, each with an equal right to use the whole property. When purchasing a property with someone else, most buyers will choose to take the title as joint tenants. If one joint tenant passes away, the property is transferred to the surviving joint tenant upon death. This means the property does not become a part of the estate of the deceased and will not be subject to probate fees, will not be taxed as a part of the estate, and will not be distributed among the beneficiaries of the estate.
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Individuals who own a home in their name alone may consider adding a family member to the title as a joint tenant for estate planning purposes. This can help avoid probate fees and taxes when the homeowner passes away as the title will transfer by right to the other owner. If the deceased owner is the only name on the title, the home must be probated along with other assets of the estate, which will significantly increase fees that must be paid before the proceeds of the estate can be distributed to the beneficiaries.
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What is Tenancy-in-Common?
Also known as tenants in common, this is a form of ownership where multiple people own separate shares of the property, and the shares can be dealt with separately. For example, two individuals may each own 50% of a cottage property or a home, or one person may own 80% and the other person 20%. The division of ownership can be fully determined by those on the title, and no party is entitled to another person’s share upon that person’s death.
Tenancy-in-common allows each owner to pass on their share in the property to beneficiaries under their will if they choose to do so. For example, if two couples purchased a cottage property together—with each person owning a 25% stake in the property—each couple could independently pass on a 50% share in the property to their children upon their death.
Learn more about the differences between joint tenancy and tenancy-in-common.
To learn more about joint tenancy, tenancy-in-common, or other areas of real estate law, get in touch with the team at Linley Welwood. We can be reached through our online contact form and will be happy to answer any questions you may have regarding our services or the details of your case.