The ways two or more individuals own real property may affect what happens to the property or each party’s interests during foreclosure or financial distress. When two or more people purchase real estate, whether spouses, friends, domestic partners, or business partners, they may not put as much thought into how they will take title to the property as they do to location and condition.
However, titling property is just as important as other considerations when it comes to purchasing real estate. When two or more people buy property, they become concurrent owners. Concurrent ownership means two or more parties owning property together, with neither party having exclusive possession and use of any particular part of the property.
In New York, tenancy in common is a type of concurrent ownership. Concurrent ownership has benefits and consequences, when it comes to selling property, filing bankruptcy, estate planning, protecting property from creditors, and contributing towards property maintenance.
Before purchasing real estate with someone else, each party should think about how she/he plans to use the property and how he/she plans to dispose it during and after his/her lifetime, and then decide which type of ownership fits him/her.
Tenancy in common is the most prevailing form of concurrent ownership used by unmarried individuals. In New York, where the purchase price of real property may be too much for one person, tenancy in common ownership allows even total strangers to buy a home together.
In a tenancy in common, two or more individuals own property in undivided interests. The interests may be broken down into any percentage. For instance, two individuals may each own an equal undivided interest or one person might own a 10% undivided interest and the other person owns the remaining 90% interest. Whatever the undivided interests, each owner gets to possess and use all of the property.
The benefits of titling property in a tenancy in common include each owner getting a freely alienable undivided interest in the property. Each owner is free to give away, sell, or encumber the property. Upon death, each owner’s interest in the property passes by will, trust, or intestate succession to the owner’s heirs, beneficiaries, or devisees. The co-owners have no right of survivorship in another owner’s undivided property interest.
When facing foreclosure or financial distress, contact an experienced New York bankruptcy attorney to learn more about the bankruptcy process.