Tenancy In Common And Joint Tenancy: What You Should Know About These Options

Buying a home with someone else is a big deal and a serious financial commitment. Two of the most common ways people can share a joint ownership interest in a property is through tenancy in common or joint tenancy. While both options give each person shared ownership of a property,  it's important to understand the differences between the two before you sign any agreements.

What are the similarities of a tenancy in common and joint tenancy?

In both cases, the term "tenancy" means "owner." Regardless of which arrangement is used, each owner has the right to inhabit the property, use it as he or she sees fit, and benefit from its resources. If the property is rented out or leased in some way that produces income (for example, through mineral rights), each owner is entitled to a proportionate share of that income based on their ownership interest.

Each owner (and there can be more than two), bears equal responsibility for his or her share of any expenses associated with the property. This can include regular upkeep (like maintenance on the yard), semi-regular updates (like repairs to the roof) and major expenses that are unexpected (like repairs to a crack in the foundation).

Unless there is a contract that bars such action, each owner has the ability to "encumber" their share of the property through a loan or other financial obligation -- even if the other owners don't approve. This can sometimes set the stage for conflicts, especially if one owner runs into debts and decides to use his or her share of the property as a guarantee.

What are the main differences between tenants in common and joint tenants?

Essentially, joint tenancy confers equal ownership on all the parties involved, while tenants in common can each own a different amount of the property. Joint tenancies also carry the right of survivorship. If one person holding half a joint tenancy dies, the other person holding the other half automatically inherits the whole thing unless other provisions were made.

Joint tenancies are created in one transfer, while tenancies in common can be created during multiple transfers. Tenancies in common often occur when a family property is handed down through the generations. For example, maybe two siblings owned a family farm as joint tenants -- a 50/50 split. When one sibling retires, she sells her share of the farm to her two children, who each gain a 25% interest in the property. The transfer to the original owner's children severs the joint tenancy and the farm then becomes a tenancy in common. 

Ultimately, there are pros and cons to each type of ownership. A real estate attorney can help you decide which is right for you.