Tenancy in Common vs. Joint Tenancy with the Right of Survivorship

When two or more people decide to buy real estate together, they should review the types of concurrent ownership to be aware of their options if the relationship goes sour or a party gets into financial distress.

Tenancy in Common

In a tenancy in common, two or more people own property in undivided interests. While there are benefits to owning property in tenancy in common, there are potential problems that should be considered. Each tenant in common is responsible for paying property taxes, liens, assessments, and repairs. Generally, one owner who pays taxes or assessments or makes needed repairs, is entitled to contribution from other owners in proportion to each owner’s undivided interest.

If there is an argument regarding the disposition or use of property, or if one owner desires sole ownership and possession of a portion of the property, each of the owners may file suit for a property partition. For instance, one tenant in common desires to sell the entire property, while the other owners refuse to sell. If the court allows a partition, the property will be divided among the owners, with each becoming the sole owner of a portion of the property. If the court finds that physically partitioning property would cause injury to one or more of the owners, the court may order the entire property sold and the proceeds divided among the owners according to their undivided interests.

Joint Tenancy

In a joint tenancy with the right of survivorship each owner gets to possess and use all of the property. This is similar to a tenancy in common. The difference is the right of survivorship. In a joint tenancy with the right of survivorship, when one owner passes away, that owner’s interest in the property automatically terminates, and transfers to the other joint tenants. The other joint tenants obtain that owner’s share in the property, no matter what the provisions are in the deceased owner’s will, trust, or intestate succession laws.

If the ownership interests among three or more joint tenants are in unequal shares, the deceased owner’s share is divided between the surviving joint tenants pursuant to their respective pro rata interests, unless the joint tenancy creating instrument allows otherwise.

Because a joint tenancy with the right of survivorship affects the disposition of property, consider estate planning issues when using this form of concurrent ownership. Although an interest in a joint tenancy cannot be devised, joint tenants can convey all or part of their individual interests during their lifetime to a third party, severing the joint tenancy. Once a joint tenancy interest is transferred, the transfer destroys the right of survivorship and creates a tenancy in common

The form of ownership in which people title to property can affect the way in which the parties dispose the property, use it, deal with bankruptcy, face foreclosure, and pass it to others.

When facing foreclosure or financial distress, contact an experienced attorney to learn more about the bankruptcy process.


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