Taking Title: Joint Tenants vs. Tenants in Common

Buying

When clients are thinking about buying and thinking about their title to the new home, I often get asked, "Whats the difference between Joint Tenants & Tenants in Common?"


There are many reasons to buy property with another person or group of people. If you’re thinking about taking this step, one of the first agreements you’ll want to make with the other person or people involved is how you will hold title to the property. The two most common ways to hold title are “tenants in common” and “joint tenancy.” So what’s the difference? Here’s what you need to know.

 Joint Tenants has rights of survivorship between all parties on title, and are the forms of ownership most commonly used by married couples. In general this means that both parties own 100% of the property and there is no divided interest between the parties on the title. 

 The “rights of survivorship” means that the property passes directly to the other party(s), with in the title, and dose not pass to hairs outside of the title or in their will. This is an excellent benefit to ensure that the property does not go through probate upon the death of one party.  

One tenant cannot sell their interest in the property, because they have an undivided 100% interest. Any sale has to have the consent of both parties. Joint tenancy is not restricted to married couples, and multiple people can take Joint Tenants

 In Tenants in Common each “owner” has the right to their interest or percentage invested in to the property, but only to their interest. For example, if you purchase a home with a business partner, and you put up 70%  and he puts up 30%, you own 70% of the property. If anything happens to you, your 70% passes to your heirs, not to your partner or his heirs.

 This arrangement is beneficial for unrelated parties, because you call the shots about who inherits your property. It may have to go through probate, but if you’ve left clear instructions about your wishes, it should not be a problem.

 An additional benefit is that you can sell your share any time you want, without the consent or approval of your partner(s). You also have the right to mortgage, transfer, or assign your interest–and so do your partners.

 As you contemplate purchasing property with your spouse, business partner, parents, or friends, it’s critical that you know how you want to title it. If you decide to title the property as Joint Tenants or Joint Tenants with Rights of Survivorship, you do not need a separate agreement stating this decision. You can simply specify the terminology you want on the deed you receive from the seller. Whichever method of ownership you select, knowing the pros and cons of each will help you choose what’s best for your situation.