Tenancy in Common and Joint Tenancy are different ways of holding real estate property between more than one individual.  In my experience, multiple people owning a real estate property together is most common among married couples who have purchased a house together, but that is not always the case.  I have seen siblings who own property together, or parents and children who own property together, or even neighbors who have purchased something like a mountain cabin together to share and use without one neighbor needing to bear the full cost of purchasing a cabin.

In most of these situations, purchasers don’t pay a lot of attention to how the real estate asset is titled.  People will tell me that both names are on the house, or both names are on the property, which is what makes sense to say, but they get a bit confused when I ask if the property is titled in joint tenancy or tenants in common.  I am not trying to be confusing when I ask about how a property is titled, but rather I am trying to find out an important distinction between the two ways of owning property with someone else, as the difference in how property is held can greatly affect an estate plan and how property is distributed.

 

Joint Tenancy Creates a Simple Way to Transfer Real Estate

If a piece of real estate property is owned by two people as joint tenants, then they are considered joint owners.  If one joint owner dies, the property is then completely owned by the remaining owner who is alive.  The surviving owner is then entitled to do whatever the surviving owner wants with the real estate property.  The surviving owner should probably record a death certificate with the county clerk and recorder’s office where the real estate is located, so that the county will know that the deceased person is no longer an owner, but that is more to let the county and everyone else know that the surviving owner is now the sole owner of the property, and the surviving owner has authority to control the property and control what happens with the property.

Joint tenancy is most often the form of ownership associated with married couples who have purchased a house together.  The joint tenancy ensures a quick and easy transfer of ownership to the sole surviving spouse after one spouse passes away.  Most married couples want the family house to transfer to the surviving spouse in the case of the first spouse to pass away, so joint tenancy makes sense to have as a form of real estate tiling and ownership in these types of situations.

Joint tenancy may also make sense to use in other situations, like keeping a family vacation property in the family, where siblings may own a vacation property or cabin as joint tenants, so that when siblings pass away, the vacation property remains owned by the surviving siblings.  If that is the desired outcome, then joint tenancy works great and passes property to the surviving joint owner or owners with a minimum of effort and work.

 

Tenants in Common Is Also a Perfectly Viable Option for Owning Property and Passing it On

Owning property as a tenant in common is a wonderful way to own property among multiple owners.  If multiple owners are tenants in common of a piece of property, then each owner can dictate what happens to their portion of ownership when each owner passes away.  The other owners do not simply become the owner of the deceased person’s portion of the property when a fellow owner passes away, as would be the case in a joint tenancy arrangement.  Instead, the deceased owner’s will or trust can dictate who will inherit the deceased owner’s portion of the property.  This allows for each individual owner to make their own decision on what to do with their portion of the real estate upon the individual owner’s demise.

In situations where the owners are not married, or not family members, this makes a lot of sense, or even if family members want to leave their portion of ownership to someone other than their fellow owners, this case makes sense.  Tenants in common can own property together, but pass on what they own to whomever they choose, not just the other owners, which would be the case with joint tenancy, as discussed earlier.

 

Choosing the Right Form of Ownership Allows You to Reach the Outcome You Want

While the potential outcomes of owning real estate as joint tenancy or tenants in common are different, there is not just one right way, or wrong way to own property.  Instead, you want to decide what you want to have happen and choose the right form of ownership to accomplish your goals in transferring property.  Property can be changed from one form of ownership to another, but property owned as joint tenants cannot be transferred or changed by just one of the joint tenants.  In that way, a joint tenant can protect their own interest in a property by preventing a sale or transfer to someone other than a desired joint owner.  Tenancy in common provides more flexibility, as an individual tenant in common can transfer their ownership to anyone they choose at any time, but that may not be what the other owners want.  As such, you want to choose how you own property with others carefully, and do so with an understanding of how the differences in ownership can affect you and your property.

From an estate planning perspective, you want to know where your real estate assets are going and how you can ensure the real estate assets get where you want after you pass on.  An experienced estate planning attorney can help you know the proper way to address assets titled in joint tenancy or tenants in common.  To make an appointment to discuss how your real estate titling will impact your estate plan, and to ensure your real estate assets go where you want them to go, click the button below to make an appointment.