Joint Tenancy vs. Tenants in Common: What's the Difference?

There are many situations in which you could own property with someone else. Common examples include a couple buying their first house together, friends purchasing a piece of real estate to share for recreation or business purposes, and inheriting a piece of property with siblings.

Each of these arrangements raises legal questions for the co-owners. What ownership interests do you have as a co-owner? What share of the property is yours? Can you use the entire property even if you aren’t the sole owner?

The answers to these questions depend on the type of joint ownership established in your title or ownership agreement. There are two prevalent types of joint ownership: Joint tenancy and tenancy in common. This article will cover the requirements and differences between these types of ownership so that you can make the best decisions as a property owner.

The Four Elements of Joint Tenancy

For there to be a joint tenancy, these four requirements have to be met:

1. Same Time

Joint tenants must receive their interest in the property at the same time.

2. Same Source

Joint tenants must receive their interest in the property from the same source, such as a deed or title.

3. Equal Interest

Joint tenants must possess an equal share of the property. For example, two friends have equal interests in real property if they each contribute 50 percent of the purchase price. By contrast, if one friend or business partner contributed 20 percent while the other contributed 80 percent—or one contributed 50, another 40, and the last 10 percent—their shares are unequal, and they aren’t joint tenants.

4. Undivided Interest

As co-owners of the property, joint tenants have an equal right to access and use the entire property.

The Elements of Tenancy in Common

Like joint tenancy, tenancy in common gives co-owners an undivided interest to access and use the entire property. On the other three elements, however, tenancy in common sets different requirements:

1. Doesn’t Have to Be the Same Time

In a tenancy in common, the co-owners don’t have to receive their ownership interest at the same time.

2. Doesn’t Have to Be the Same Source

Tenants in common can receive their interest in the property from different sources, such as deeds, titles, or wills.

3. Doesn’t Have to Be an Equal Share

Tenants in common don’t have to possess equal shares in the property. If one owner has a greater interest than the others, a tenancy in common exists.

Key Differences Between Joint Tenancy and Tenancy in Common

To sum up: Joint tenants must receive their property interest simultaneously and from the same source with an equal share and equal rights to possess the entire property.

By contrast, tenants in common can receive their interest at different times and from disparate legal sources and don’t have to possess equal shares. However, like joint tenants, tenants in common have an equal right to use the entire property.

The Right of Survivorship

The other main difference between joint tenancy and tenancy in common is what happens to a co-owner’s share of the property when they die.

In joint tenancy, surviving joint tenants enjoy the right of survivorship, meaning that the deceased owner’s property rights transfer automatically to the surviving owners. Because joint tenancy provides the right of survivorship, it is sometimes referred to as “joint tenancy with right of survivorship” and abbreviated JTWROS.

By contrast, there is no right of survivorship in a tenancy in common, which means property ownership doesn’t automatically pass to the surviving owners. Instead, the property belongs to the deceased owner’s estate. A deceased owner could name the surviving owners as beneficiaries of their estate, but they don’t have to. They could leave it to their family members or dispose of it however they see fit.

Pros and Cons of Joint Tenancy vs. Tenancy in Common

For some people, joint tenancy will be the best setup; for others, tenancy in common will be more attractive. It depends on your specific circumstances and overall estate plan. Some factors to consider include:

Probate

Probate is the process of proving that a deceased person’s last will and testament is legally valid and administering their estate in accordance with the will. Joint tenancy could help simplify estate planning since the property automatically passes to your surviving joint tenants and does not enter the probate process. This is typically the default option with married couples and can also be used by unmarried partners buying a house together.

Taxes

Joint tenancy can bring tax benefits to homeowners, including delaying estate tax collection or avoiding gift taxes. However, things can get more complicated if joint tenants are not married couples. If you have questions about the tax benefits of joint tenancy versus tenancy in common in your specific situation, talking with a real estate lawyer could be highly beneficial.

Terminating Ownership Rights

There are different ways to terminate a joint tenancy versus a tenancy in common. Ending a joint tenancy could involve partition of the property, selling your property interest to someone else, or transferring your interest to yourself. Depending on state laws, this last option can be done directly or through a third-person “straw man” who transfers the interest back to you.

Ending a tenancy in common can also happen in different ways, such as a court-ordered partition of the property, selling the property and dividing the money among the co-owners, or one co-owner buying up all the shares in the property.

Find Experienced Legal Help

Legal advice is essential when you’re considering the best way to set up your property ownership. A qualified attorney can guide you through all the different options to help you make the best decision. Attorneys provide consultations to discuss the facts of your case, your goals, and the ownership arrangement that best fits those long-term interests.

Visit the Super Lawyers directory to find an experienced real estate lawyer in your area.