Today in this discussion, our experienced real estate experts have explained joint tenants vs tenants in common. Many people feel confusing it because of its definition. So, if you are feeling the same, don’t worry we’ve got your back. Complete reading the article and you will understand everything you need.
If you are planning to buy a property with your spouse, siblings, or any other person, you may have some way to hold the ownership of that property. Because when it is a joint property, you also need to consider the ownership division. According to the property law, you guys can hold the ownership in two ways.
Joint Tenants VS Tenants in Common
The first one is the joint tenant, and the second one is tenants in common. These two types may seem similar to you since they have so many differences in legal and financial rights, ownership rights, and so on. So, when two to more people want to hold the ownership of a particular property collectively, they must choose one of those two ownership types.
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In this writing, we will try to look at the differences between the joint tenant and tenants in common. So, keep reading the entire article for more.
What is Joint Tenancy?
In this type of ownership, the owners have the equal and same interest or ownership in the property. In other words, the co-owners can hold the same interest as the main owner. Also point to be noted here is that in the joint tenancy, the owners have the right of survivorship.
Generally, this type of property ownership is seen between a couple or spouse or siblings in a long-term partnership. Joint tenancy can only be used when all the owners and co-owners agree upon the consent of the right of survivorship. If you are buying a property collectively and you didn’t specify the ownership types. Then, in general, it will fall under the joint tenancy in property law.
In joint tenancy ownership, the most common tenants are the husband and wife. However, when it is a joint tenancy, there must be four types of unities. They are in the following:
- Unity of title (the co-owners also possess the same title of a particular property)
- Unity of interest (the co-owners will have the same and equal interest in that property)
- Unity of possession (equal rights in the property possession)
- Unity of time (There should be the same interest of time)
If any of these unities are missing in any property ownership. Then it will not be considered as joint tenancy. Instead, it will be considered as tenancy in common.
The Right of Survivorship in Joint Tenancy
The right of survivorship is one of the primary and essential features of the joint tenancy. In an easy word, the right of survivorship refers, when one of the property owners will die, the other joint tenant will automatically get the ownership of that property. If the joint tenants are not husband and wife, joint tenancy can be used by any civil partnership spouse.
In such cases, it will be considered as a part of the estate planning strategy. This planning strategy will also let the property ownership pass to another tenant when the other passes away. If there are multiple co-owners remain for a property, then the joint tenancy will also remain. But if there is only one tenant left, then the property ownership will pass to that person. And that person will become the sole owner.
What is Tenancy in Common?
In the tenancy in a common system, two or more people can own a particular property. And when someone owns the property as the tenancy of common, they can dispose of that from the system whenever they want. Thus, in the tenancy system in common, the ownership can be equal and unequal by the parties.
A very simple example can be; suppose if someone owns 98% of a particular property, the other party can own the rest 2%. This type of ownership is possible in the tenancy in common. However, there is nothing called the right of survivorship in this system, which means a tenant can easily sell their share or dispose of it whenever they will.
Ownership as a tenant in common is basically for the people who want to contribute in very different amounts. So, tenancy in common will help them to own or buy a property together. Especially, it is widely common for the parent with adult children.
Things That You Need to Consider
Before buying or owning a property, you may need to consider some factors. First and foremost, the thing is, you need to know the basic differences between joint tenancy and tenancy in common. Sometimes, depending on your situation, the tiny little effects of these types of ownership can lead to serious trouble.
For example, after owning a shared property in joint tenancy, If the other tenant wants to sell or give away the property, it can be troublesome. That is why, before buying a property with other people, you need to consult with them. And it is recommended that you consult with a property lawyer.
When you talk to a property lawyer, you can understand and know what form of ownership is suitable for you. Even you can also know about the effects of estate planning. However, it would be best if you also had to keep one thing in your mind: huge tax differences between these forms of property ownership. Therefore, it is also wise to talk to a tax financial advisor for each type of ownership.
How Can You End a Joint Tenancy?
In some cases, you may need to end a joint tenancy. There are some circumstances where the joint tenancy will come to an end. Those circumstances may include the following:
- When you will sell your interest or share to other parties
- When a tenant transfers their share to the other tenant
- When a tenant wants to divide their ownership unilaterally.
In the joint tenancy, the ownership can be shared when a tenant will transfer all the interest of their property. And when the other tenant transfers their share, it will not affect the share of the other registered tenant. All these processes require an authorized government body. However, to transfer the property, all owners need to sign the transfer application.
Need Legal Help for Difficulties Related to Tenancy?
Though the joint tenancy and tenancy in common may sound similar, there are some significant differences in these two types of property ownership. Also, it has a significant difference in the tax. That is why, before holding the title of your property, you need to do your own research.
It is wise for you to consult with a professional property lawyer who can help you to clarify all these finer details. And also, you can know what forms of ownership need to go for. They will also help you to clarify the tax differences. Hopefully, this writing helped you to understand the basic differences between the joint tenants vs tenants in common.
Are you facing difficulties related to real estate property? Well, if you are going through a tough time regarding your joint property, you can call us at +1-780-488-4152 and set an appointment now. You can also submit your queries to our experienced real estate lawyers.