When two or more people purchase a property, they must decide how they are going to own it. The two common forms of co-ownership are joint tenancy and tenancy in common, also referred to as an undivided interest, or an undivided fractional share in property. Some states have a further form of undivided interest specific to a husband and wife. The form of co-ownership you chose is largely determined by what you want to happen to your property after you die.
In all but a few states, joint tenants share ownership of real estate equally. For example, if three people own a house as joint tenants, all of them hold an equal one-third share. In many states, joint tenancy carries an automatic right of survivorship. This means that, when one joint tenant dies, the property automatically passes to the survivor or survivors without the need for a will or further conveyance. Complete ownership goes to the last one left alive. In other states, survivorship is not presumed and joint tenants must choose if they want survivorship to apply. If it does not apply, the owners are treated as tenants in common when one of them dies.
Tenancy in Common
Tenants in common can hold property in equal or unequal shares; for example, one owner may own a half-share, while the others own a quarter-share each. Their percentage shares are typically set out in the deed that transfers the property to them. As with a joint tenancy, all co-owners have the right to use and possess the entire property, as long as they do not exclude the others. To take any action regarding the property, such as leasing, selling or mortgaging, all owners must act together. However, the major distinction between a tenancy in common and a joint tenancy is that each owner can dispose of his or her share in the property at any time without the permission of the other co-owners. Furthermore, an owner's share does not die out upon his death, enabling him to pass it through probate to beneficiaries under his will.
Husband and Wife
In some states, property transferred to a husband and wife creates, either automatically or by choice, a specific form of "husband and wife" tenancy. These have various names, such as tenancy by the entirety, community property (with or without survivorship) and survivorship marital property. Husband and wife tenancies are variations on joint tenancy, and have many of the same features. Typically, they give the husband and wife equal rights to use, control and take income from the property while they are both alive. Upon the death of the first spouse, the survivor automatically owns the property without the need for probate, or has a priority claim to it.
Generally speaking, a tenancy in common is presumed unless the transfer deed says otherwise. Clear words are needed to create a joint tenancy, such as "joint tenants with the right of survivorship." Be aware that all law is local, and some states have specific requirements about the words you must use. Michigan, for example, requires the words "as joint tenants and not as tenants in common." Texas requires a separate agreement signed by all the co-owners. Questions about taking title should be addressed to a local real estate attorney.
- Phil Ashley/Lifesize/Getty Images