The two most popular methods of holding title are “tenants in common” and “joint tenancy.” What is the distinction? Here’s what you should know.
What you will discover:
Tenants with a Common Interest
The Joint Tenants Make It Official
There are several reasons why you should acquire property with another individual or group of people. If you decide to go forward with it, one of the first agreements you should establish with the others is how you will hold ownership to the land. The two most popular methods of holding title are “tenants in common” and “joint tenancy.” What is the distinction? Here’s what you should know.
Table of Contents
Tenants with a Common Interest
As a tenant in common (TIC), you may own property with others. This implies that each “owner” has the right to just their interest (%) in the property. For example, if you buy a cabin with a business partner and put down 70% and he puts down 30%, you own 70% of the property. If you die, your 70 percent will go to your heirs, not your partner’s or his heirs.
This arrangement is advantageous for unrelated parties since you have control over who gets your property. It may have to go through probate, but if you have given specific instructions, it should not be an issue.
Another advantage is that you may sell your share whenever you choose, without the knowledge or approval of your partner(s). You and your partners both have the right to mortgage, transfer, or assign your stake.
Tenants in Common
The most prevalent types of ownership utilized by married couples are joint tenants (JT) or joint tenants with rights of survivorship (JTWROS). In general, this implies that both parties own 100% of the property, with no shared interest as with TIC. Because of the “rights of survivorship” provision, the property flows straight to the other person outside of the will. This is a fantastic advantage that ensures the property does not go through probate. Unlike TIC, however, a single renter cannot sell their stake in the property since they own it entirely. Any sale must have the approval of both parties. Joint tenancy is not limited to married couples, but if you select this option, be sure you understand what it entails.
Make It Legal
When you are thinking about buying property with your spouse, business partner, parents, or friends, you should think about how you want to title it. You do not require a separate agreement indicating your intention to title the property as Joint Tenants or Joint Tenants with Rights of Survivorship. On the deed you get from the seller, you may simply choose the terms you desire.
However, if you decide to buy property as tenants in common, you should obtain it in writing since real estate transactions need written agreements. You may, thankfully, utilize our Tenants in Common Agreement. Feel free to modify it to fit your specific needs before downloading and printing it. Even if you are not ready to make a final choice on ownership, our form may serve as an excellent reference to help you understand what is included in a TIC agreement.
Whichever kind of ownership you pick, understanding the advantages and disadvantages of each can help you decide what is best for your case.
