Tenancy In Common
What Is Tenancy in Common?
Tenancy in Common is a legal agreement between two or more parties to share ownership of a piece of land or real estate property.
Under the residential lease agreement, each owner may control a different percentage of the commercial or residential property. Each owner has the right to sell or borrow against their percentage of ownership and to bequeath their share to their heirs.
How Does Tenancy in Common Work?
A tenancy in common agreement can be established at any time, and another individual may enter into the agreement after it has been created. Each owner (tenant) can independently sell or borrow against their ownership percentage.
All tenants are responsible for the homeowner's responsibilities of their share, including property and income tax bills, mortgage payments, and home repair expenses.
If the tenants cannot agree on the use or the sale of the property, one of the tenants may choose to sell their share to another tenant. In some disputes, the court may need to get involved.
Tenancy in Common vs. Joint Tenancy
There are some significant differences between tenancy in common and joint tenancy.
With joint tenancy, each tenant has the same interest in the property, and each receives their interest at the same time through the same deed.
Another difference between the two forms of property ownership is that in joint tenancy a tenant’s interest automatically passes to the other owners upon their death. Therefore, tenants should be sure to include their interest in their estate planning.
Under a joint tenancy, if one tenant wishes to end the arrangement, they can sell their share to another tenant, or the agreement may be legally changed to a tenancy in common agreement.
Pros and Cons of Tenancy In Common
So, what are the advantages and disadvantages of a tenant in common agreement?
Creating a tenancy in common agreement with a family member or trusted friend can make it easier and less expensive to enter the real estate market. Tenants can divide bills, maintenance, and other expenses.
On the other hand, if one tenant misuses the property or defaults on their payments to the lender or landlord, the other tenants are responsible for the full payment of the loan. In this case, the lender has the right to seize the property from all tenants and begin eviction proceedings.
A tenancy in common agreement can be a valuable asset in someone’s estate plan since their percentage passes to their heirs without going through the often lengthy and expensive probate process.
However, the other tenants may end up sharing the property with a complete stranger. This new owner could be someone who has different views on how the property should be used or who wants to sell or divide the property.
Helpful Resources:
What Is Tenancy in Common?
Tenancy in Common is a legal agreement between two or more parties to share ownership of a piece of land or real estate property.
Under the residential lease agreement, each owner may control a different percentage of the commercial or residential property. Each owner has the right to sell or borrow against their percentage of ownership and to bequeath their share to their heirs.
How Does Tenancy in Common Work?
A tenancy in common agreement can be established at any time, and another individual may enter into the agreement after it has been created. Each owner (tenant) can independently sell or borrow against their ownership percentage.
All tenants are responsible for the homeowner's responsibilities of their share, including property and income tax bills, mortgage payments, and home repair expenses.
If the tenants cannot agree on the use or the sale of the property, one of the tenants may choose to sell their share to another tenant. In some disputes, the court may need to get involved.
Tenancy in Common vs. Joint Tenancy
There are some significant differences between tenancy in common and joint tenancy.
With joint tenancy, each tenant has the same interest in the property, and each receives their interest at the same time through the same deed.
Another difference between the two forms of property ownership is that in joint tenancy a tenant’s interest automatically passes to the other owners upon their death. Therefore, tenants should be sure to include their interest in their estate planning.
Under a joint tenancy, if one tenant wishes to end the arrangement, they can sell their share to another tenant, or the agreement may be legally changed to a tenancy in common agreement.
Pros and Cons of Tenancy In Common
So, what are the advantages and disadvantages of a tenant in common agreement?
Creating a tenancy in common agreement with a family member or trusted friend can make it easier and less expensive to enter the real estate market. Tenants can divide bills, maintenance, and other expenses.
On the other hand, if one tenant misuses the property or defaults on their payments to the lender or landlord, the other tenants are responsible for the full payment of the loan. In this case, the lender has the right to seize the property from all tenants and begin eviction proceedings.
A tenancy in common agreement can be a valuable asset in someone’s estate plan since their percentage passes to their heirs without going through the often lengthy and expensive probate process.
However, the other tenants may end up sharing the property with a complete stranger. This new owner could be someone who has different views on how the property should be used or who wants to sell or divide the property.
Helpful Resources: