Buying or converting your home to a tenancy in common, or TIC, may be complicated. Learn about the benefits and drawbacks here.
What you will discover:
When you own a house or property, you may not consider yourself a renter. However, historically, a renter was just someone who occupied real estate. A tenant in common (TIC) is a legal term that outlines how two or more persons may share ownership of real estate. Here’s what you should know if you want to buy a TIC or another property with a friend, family, or partner.
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What exactly does it mean to be a tenant in common?
A tenancy in common occurs when two or more persons share ownership of a property on a percentage basis. Property taxes and upkeep are the responsibility of each owner.
A TIC has legal rights to the property based on their ownership share. When a TIC owner dies, their part of ownership is transferred to their estate and divided to heirs. A TIC may also sell or mortgage their stake in the property without the agreement or involvement of the other owner.
Tenants in common often possess the following properties:
Tenants in common have less rights to the property than joint tenants. Rather than being limited to a portion of ownership, each property owner has the same legal rights and duties as all other owners.
Tenancy in common is analogous to joint tenancy. The distinction is that this categorization is only available to couples who are married at the time they purchase the home. The survivorship requirements for tenancy by the entirety are substantially the same as those for joint tenancy. If one spouse dies, the remaining spouse inherits the whole estate.
In this scenario, if the couple owns the property rather than two separate persons, the pair is considered a distinct legal entity. In terms of real estate, each partner has the same rights and duties.
Neither spouse has the ability to sell or split their stake without the approval of the other spouse. One party cannot sell their individual stake in a tenancy in common.
When one owns property as a TIC, it is quite straightforward to sell. A TIC may sell their part of the property without the approval of the other owners. This is known as the “right of partition,” and it allows you to sell, mortgage, or even transfer your share to another person or corporation.
If you acquire the agreement in writing, you may construct a Tenants in Common Agreement to put limits on sale or transfer. Nonetheless, a single tenant in common cannot sell the whole property without the other owner’s permission. In general, one owner cannot compel another owner to sell their share if they do not want to.
Even though a joint tenancy or tenancy in full would be preferred, married couples may hold property as tenants in common. Nonetheless, for a number of reasons, couples may choose to hold property as TICs. Listed below are a few examples:
Essentially, a couple may choose a TIC arrangement to satisfy specific estate planning objectives, manage risk concerns, or restrict exposure due to current debt commitments.
A TIC cannot, in general, expel another TIC. Each tenant has equal property rights and duties. There may be certain exceptions, such as domestic or physical violence.
If you have a disagreement with someone who shares ownership of your house, you should consult with a lawyer about your alternatives.
As with any other kind of ownership, there are advantages and disadvantages to owning a property with someone else as a TIC.
Of fact, what is advantageous to one person may be detrimental to another. For example, being able to mortgage your half of the property might be really beneficial. However, if the other owner places a mortgage on the home, it is often a disadvantage. Even though the other owner can only mortgage their portion of the property, you may still have to deal with removing the mortgage when all of the owners desire to sell the property as a whole.
Common Agreement Tenants must be in writing. To identify ownership interests, an oral agreement will not suffice. The deed or transfer paperwork will usually specify how the owners hold the property, such as tenants in common, joint tenants, or tenancy by the whole. A Tenants in Common Agreement may assist to ensure that everyone is on the same page and holds each other accountable for the shared expenditures.
