Joint Tenancy vs. Tenancy in Common
Making the Law Simpler
Two Main Types of Joint Property Ownership
Estate planning often involves making decisions about properties that have more than one owner. When planning your estate, you’ll likely be asked if your property is owned under one of the two main types of joint property ownership: joint tenancy or tenancy in common.
Both ownership types allow multiple individuals to own the same property. Both also have different rules regarding how ownership portions can be passed on to others.
Joint tenancy and tenancy in common may sound complicated, but don’t worry. We’ll explain them both. We’ll also talk about the differences between these two ownership structures and explore how they impact estate planning.
Looking for a quick comparison?
Check out our chart of Joint Tenancy and Tenancy in Common differences.
What is Joint Tenancy?
Joint tenancy is a type of co-ownership where each tenant, or owner, has an undivided interest in the property. This means that each tenant owns the entire property rather than just a portion of it. When two or more people are joint tenants, the ownership of the property is automatically transferred to the surviving owners in the event that one of the tenants dies.
What is Tenancy in Common?
Tenancy in common is another type of joint property ownership between two or more people. Each tenant in common owns what’s known as an undivided fractional interest in the property, meaning they own a separate share but can access and use all of the property. They can leave their share to whomever they choose in their will. Tenancies in common can be created for any type of property, including real estate, cars, and bank accounts.
Advantages of Each Ownership Type
Each type of property ownership has its own advantages and disadvantages. Joint tenancy is often seen as simpler and more straightforward, while tenancy in common gives each owner more control over what happens to their share of the property after death.
Advantages of Joint Tenancy
Joint tenancy is the default property ownership for married couples in many states. This means that upon the death of one partner, the title of the property automatically passes to the surviving partner.
Joint tenancy is a popular way to own property because it is simple and straightforward. It can be an ideal arrangement for people who are buying a property together, such as family members or friends. It is important to note that joint tenancy requires the tenants to have equal rights and ownership interests in the property. This means that if one tenant wants to sell their interest in the property, the other tenant(s) must agree to the sale.
Joint Tenancy Details:
- Your ownership share automatically transfers to the other owner upon your death
- Typically, both owners’ names appear on the same title document
- Example: your home may be a joint tenancy if you and your spouse purchased it together
Tenancy in Common Details:
- Your ownership share becomes part of your estate upon your death and can be passed down to the person you choose
- Each owner has their own deed or title
- Example: Your stake in a rental property bought with other investors may be a tenancy in common
Advantages of Tenancy in Common
Tenancy in common dictates that the ownership portion of the property passes to the individual’s estate at death. This means that if you are a tenant in common with someone else and they pass away, their share of the property will go to whoever is named in their will or estate plan.
You should keep a few things in mind if you’re considering creating a tenancy in common agreement. First, all tenants in common must agree on the terms of ownership, including how the property will be used and who will be responsible for maintenance and repairs. It’s also essential to have a clear understanding of what would happen if one of the tenants in common dies or wants to sell their interest in the property.
Key Differences Between Joint Tenancy and Tenancy in Common
What are the main differences between these two ways for co-owners to hold title to property?
- Joint tenancy requires all owners to have an equal, undivided interest in the property, while tenants in common may have unequal interests.
- Joint tenants also have the right of survivorship, meaning that if one joint tenant dies, the other tenant or tenants inherit their interest. There is no right of survivorship with tenants in common, so each tenant’s interest goes to their own estate upon their death.
Joint tenancy is often used by married couples or business partners, while tenants in common is more commonly used when friends or family members purchase property together. It’s important to understand the difference between these two types of ownership before purchasing property with others, as it can have a big impact on what happens to the property after one of the owners dies.
Property Ownership Comparison Chart:
Joint Tenancy and Tenancy in Common
The Differences Between:
Joint Tenancy
Tenancy in Common
Ownership Transfer:
Your ownership share automatically transfers to the other owner upon your death.
Your ownership share becomes part of your estate upon your death and can be passed down to the person you choose.
Deed or Title:
Typically, both owners’ names appear on the same title document.
Each owner has their own separate deed or title.
Examples:
Example: Your home may be a joint tenancy if you and your spouse purchased it together.
Example: Your stake in a rental property bought with other investors may be a tenancy in common.
Explore More Life & Legacy Resources
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Common Property & Separate Property
Who can assist me if I have more questions?
Whether you’re planning your own estate or helping a loved one with theirs, understanding joint tenancy or tenancy in common can help you make the best decisions for those you care about.
For questions about property ownership or other issues that impact estate planning, talk with an experienced family law attorney. Bishota Law can help you understand how both work in your state and how to best protect your interests.
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