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Taking ownership of a house or property is a big commitment, but it is often not done alone. When two or more people become the owners of real estate there are two standard legal options: joint tenancy or tenants in common. There are advantages and disadvantages of both options. It is recommended to review both joint tenancy and tenants in common pros and cons to decide which one fits your situation best. Luckily you can begin your research here with a basic rundown of each option along with their pros and cons.

Joint Tenancy

Joint tenancy is the equal ownership of a house by every party involved. All parties must take ownership of the same deed at the same time. It is most commonly used when married couples purchase a house. Each person would be given a 50% stake in the house. If a married couple wanted to include their 18 year old child in the joint tenancy of their house, each person would own an equal share of one third. 

If one person in a joint tenancy dies, full ownership of the house will be awarded to the other person in the joint tenancy without the need to go to probate court. This rule is applicable regardless if a will is in place or not. Joint tenants still need a will though. If both were to die at the same time, a will would be necessary to determine who would take ownership of the home.

Joint tenancy does allow members to sell their shares of the property without getting the permission of other members. The joint tenancy would then be converted to a tenants in common. This is an available option unless a title is held as a tenancy by entireties. Tenancy by entireties is essentially the same as a joint tenancy, except members are not allowed to sell their shares without approval by the other members. 

Pros

  • A will does not have any effect on a joint tenancy 
  • Probate court will most likely never be necessary 
  • Approval of other members is not needed to sell your share in a standard joint tenancy

Cons

  • All joint tenants have the right to occupy and manage the property; this can become complicated if joint tenants are not married
  • In a partition lawsuit, one joint tenant can force the sale of the property
  • Non-simultaneous death can cause issues with heirs inheriting the property; only a problem if joint tenants have different heirs 

Tenants in Common

The next step in reviewing the joint tenancy vs tenants in common pros and cons is to determine what is included in a tenancy in common agreement. A tenancy in common is most commonly used when there are multiple investors in a property and each want to protect their individual investments. 

Each member of a tenancy in common can hold a different share in the property. One member could hold 25%, while another holds 60%, and another holds 15%. Even if you have a small holding, you still have a right to the use of the entire property. Members are also able to be easily added to the tenancy in common over time. The more people added to the tenancy in common, the more complex it can become. Decisions such as how mortgage and utilities will be paid is at the discretion of the members. The more members in the tenancy in common, the more people included in such decisions. 

Every individual member in the tenancy in common has complete control of their shares in the property. They are able to sell their shares whenever and to whoever they wish without consulting the other members. If a member dies, their individual shares are transferred to their heirs.

Pros

  • A small share still grants you rights to use of the entire property
  • Allows for affordable investments to be made in real estate; not having to own the entirety of the property
  • Members can easily be added over time 

Cons

  • A member can sell their share to anyone without consulting the other members; could create an unexpected dynamic 
  • If a member dies, their heir can do whatever they please with their shares 
  • Split bill payments can become complex and create unanticipated situations; a member being unable to pay their share 

So, Which is Better?

After reviewing the joint tenancy vs tenants in common pros and cons, you can now answer the question “Which is better?” Honestly, the answer is completely dependent on your situation. If you are buying a home with your husband or wife, a joint tenancy is the most common and often the arrangement works out well. If you are buying a property to invest in with other investors, a tenant in common would probably suit your circumstances better. 

It is important to remember that both are always an option regardless of your situation. There may be uncommon circumstances in your situation, therefore making it beneficial to go outside of what is standard. After doing some research it is easy to be confident in your decision, whatever it may be. 

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