1
Joint Tenancy Vs. Tenants in Common: what's The Difference?
Aisha Jenson edited this page 2025-06-14 22:47:18 +08:00
life123.com
Joint Tenancy vs. Tenants in Common: What's the Difference?
Get comfort with a thorough estate plan
Excellent
Jenn Morson
Contents
There are a number of ways to own residential or commercial property with another individual. Two ways to hold title together are joint tenancy and occupancy in typical contract. These kinds of real residential or commercial property ownership agreements each have benefits and drawbacks depending upon your specific needs and situations.
People may pick a joint tenancy or tenancy in common arrangement when they are a married or cohabitating couple, relative, company partners, investment partners, and even roomies picking to own residential or commercial property together. Whatever your reason, discovering the advantages and drawbacks of a joint occupancy vs. occupancy in common contract will help guide you through the residential or commercial property ownership procedure.
Note that while the term "tenancy" is used in rental circumstances, in this context it refers to ownership interest in a residential or commercial property. The owners in these plans would be referred to as joint renters or occupants in common and are not renters.
What is joint occupancy?
When two or more people buy a residential or commercial property together with equivalent interest in the residential or commercial property and equivalent rights, this is referred to as joint tenancy. Perhaps the most common type of joint occupancy ownership is that of a couple.
In order to be considered joint tenancy, 4 conditions should be satisfied:
- The tenants must acquire the residential or commercial property at the same time
- Equal residential or commercial property interest by each tenant
- All tenants should acquire the title deed from the very same document
- Equal rights of ownership should be worked out by all tenants
According to Gagan Saini, the director of acquisitions of JiT Homebuyer, a genuine estate services and investment company in Metairie, Louisiana, a joint occupancy arrangement needs owners to concur on any choices about the residential or commercial property. "This consists of choices such as when to offer the residential or commercial property, who is accountable for repair and maintenance, and how the make money from the sale of the residential or commercial property are divided," Saini states.
Advantages of joint occupancy
When you hold title in a joint tenancy, if one of the co-owners dies, the ownership rights immediately transfer to the staying owner or owners. For example, if Bob and Cindy are married, and Bob passes away, Cindy will immediately become the full owner of the residential or commercial property. There will be no requirement to go to probate, and Cindy will not owe any transfer taxes. If the residential or commercial property were owned in joint occupancy by unmarried persons, the staying owner or co-owners would also avoid the procedure, although they would need to declare the inherited residential or commercial property as a gift.
The automatic transfer of ownership to your co-owners, as described above, is described as the right of survivorship.
Additionally, joint occupancy warranties equal rights and ownership for all parties. So if 2 people own the residential or commercial property, each controls 50%. If there were five owners, each would control 20% interest in the residential or commercial property.
Disadvantages of joint occupancy
Perhaps the most substantial drawback of joint tenancy associates with creditors. If among the tenants owes a debt, a lender has the power to terminate a joint occupancy even if the other co-owners have nothing to do with that debt. If you are looking for joint occupancy with someone who has bad credit, significant debt, or is prone to liability by occupation, you will require to be familiar with these threats.
If you do not want your ownership to move immediately to the other owners and would rather it choose to go to your successors, joint tenancy is likewise not an excellent choice for you.
Another drawback of joint occupancy is that if you and the other co-owners can not reach an arrangement on what to do with the residential or commercial property, you would need to file a claim, referred to as a partition action. Your co-owners would be required to react to the partition action, which can be expensive and time-consuming.
What is occupancy in common?
If numerous individuals hold title under occupancy in common, this implies that each person can pick to sell their ownership interests in the residential or commercial property at any time. Unlike with joint tenancy, a tenancy in common arrangement permits for numerous owners to own various percentages of the whole residential or commercial property. Although one occupant might potentially own simply 30% of the residential or commercial property while the other owners own 35% each, this does not suggest that particular locations of the residential or commercial property are owned by those holding the larger ownership percentage. The whole residential or commercial property is offered to each owner, despite percentage, and that is called concentrated interest.
Additionally, on the event of their death, each co-owner may choose who will be the recipient of their ownership as part of their estate.
A tenancy in typical may also be referred to as a TIC agreement. The acronym means occupancy in typical.
Advantages of tenancy in common
Under an occupancy in typical title, each owner does not need to have equivalent shares. So in theory, one owner could have 25% ownership while the other has 75%.
This kind of joint ownership is perfect for groups of people seeking to share residential or commercial property or married couples who, for whatever factor, do not want their share of the residential or commercial property to transfer automatically to the enduring partner upon their death. For instance, if an individual weds a widow with children, the couple may want to jointly own residential or commercial property through occupancy in common so that the widow can leave her share of the residential or commercial property to her children rather of her partner.
Disadvantages of occupancy in common
If you do not have a will and hold title through occupancy in common, your share of the residential or commercial property will be distributed according to your state's probate laws. Under occupancy in typical, there is no right of survivorship.
If you share ownership through an occupancy in common title, your co-owners can sell their portion without your say, implying that theoretically owners might find themselves co-owning residential or commercial property with complete strangers. For instance, if three roomies hold title under occupancy in typical and among the roommates chooses to sell their part of the ownership, the remaining two roommates have no state concerning this choice.
Joint tenancy vs. occupancy in typical
The crucial distinctions between these 2 alternatives for residential or commercial property ownership are:
Choosing which ownership works for you
When deciding whether joint tenancy or occupancy in common is more matched for your requirements, the first step is to make sure you understand the distinctions between both of these co-ownership options. Choosing to own as tenants in common vs. joint occupancy needs knowledge of both choices.
According to Troy Robillard of Premiere Plus Real Estate in Fort Myers, Florida, no matter your circumstance, you will need to think about all the benefits and disadvantages of each structure along with consult professionals. He states, "Whether you're a couple, organization partners, or investors, choosing the suitable ownership structure needs mindful consideration of your goals and choices. Consulting with a lawyer or realty professional can offer important guidance customized to your unique scenarios, ensuring you make informed decisions that align with your long-lasting strategies."
This post is for informative purposes. This material is illegal recommendations, it is the expression of the author and has not been assessed by LegalZoom for accuracy or modifications in the law.
You may also like
Company
About.
Careers.
Contact.
Investors.
Press.
Partner with us.
Support
Order status.
Customer Care.
Consult with a lawyer.
Join our lawyer network.
Security.
Learn more
questionsanswered.net
Business & Legal assist resources.
Business Name Generator.
Legal form design templates.
What is an LLC?
How to Start an LLC?
How to Change Your Name.
What is a DBA?
Most Profitable Small Business Ideas.
What Is a Registered Agent?
How to Conduct a Trademark Search.
How to Discover if a Company Name is Taken?
© LegalZoom.com, Inc. All rights scheduled.
LegalZoom provides access to independent lawyers and self-service tools. LegalZoom is not a law practice and does not supply legal suggestions, except where licensed through its subsidiary law office LZ Legal Services, LLC. Use of our services and products is governed by our Regards to Use and Privacy Policy.