Tenants in Common
Definition - What does Tenants in Common mean?
Tenants in common are two or more people who have concurrent yet separate/distinct ownership of a piece of real property. Each owner in a tenancy in common situation has a right to own and use the whole property, not just a portion of it.
While a tenancy in common is similar to a joint tenancy, it does differ in a significant way. In a tenancy in common arrangement, if one of the owners of the property dies, their portion of the property is not necessarily conveyed to the other owner (as it would be in a joint tenancy); but rather, each owner has the legal authority to choose their own beneficiary.
An example of tenants in common could be three friends who purchase a property together. In this situation, each owner would have full rights to use the whole property. If one of the friends died, then the decedent’s share of the property would be passed on to the beneficiary named in their will.
Married couples or other family members are often tenants in common.
Justipedia explains Tenants in Common
Tenancy in common has several advantages:
- Not only is it the least restrictive type of ownership, but it can also allow two or more non-married individuals to own property together.
- Ownership need not be 50/50; in fact, regardless of how the ownership is divided, all parties have equal access to the property.
- Owners also have the flexibility to deed their portion of the property to another party without approval from the other owners.
Tenancy in common can, however, have some downsides:
- The flexibility to deed ownership could have some drawbacks for the other owners, because the latter won’t have a say in who they co-own the property with.
- In some cases, if one of the co-owners wants to sell the property, they may be allowed to file a partition lawsuit. If the court agrees, all co-owners could be forced to sell.
- Tenancy in common may also offer poor resale values. In fact, tenancy in common in certain real estate markets may have very little market value, which could make it difficult for any co-owner to sell their portion of the property and make a profit, increasing the chance that one of the owners would eventually apply for a partition action.