Although there is more than one co-owner of a property under Joint Tenancy and Tenancy in Common, there are significant differences in the rights and duties assigned to the owners:
- Joint ownership provides equal, unlimited and free access to all the owners of the property concerned. However, the equity in the property is different. Each owner has equity equal only to that portion of the property which he or she owns.
- In case of a Joint Tenancy, none of the co-owners can sell or mortgage the property without the permission of the other co-owners. A property held under Joint Tenancy can be sold or mortgaged only if all the owners agree. However, in case of tenancy in common, any of the owners can sell or mortgage his or her share without taking the permission of the remaining owners.
- In case a co-owner in a Joint Tenancy dies, the property concerned automatically passes to the remaining co-owners. The heirs at law of the deceased owner do not receive anything and have no right to the asset concerned. The surviving owners meanwhile will need to remove the deceased owner’s name from the asset. However, in case of Tenancy in Common, if one of the co-owners dies, his or her share of the property gets transferred to beneficiaries or legal heirs (in case there is no Will).
Tenancy in Common is advisable if all the owners have made Wills. Otherwise, in case of the death of a co-owner, interest in the real estate may pass to unintended persons. Disagreements between the new owner and the earlier owners regarding the sale of the property concerned can result in lengthy court battles.
Levine & Furman, LLC is a member of the American Academy of Estate Planning Attorneys.