Property Ownership: Joint Tenants vs Tenants in Common
Are you purchasing a house or condo with another person, a friend or a spouse and do not know how to take title? When a couple or friends decide to buy a property, condo or house, one of the first questions we ask is whether they want to hold the asset as joint tenants or
Are you purchasing a house or condo with another person, a friend or a spouse and do not know how to take title?
When a couple or friends decide to buy a property, condo or house, one of the first questions we ask is whether they want to hold the asset as joint tenants or tenants in common. The most common response?
“What’s the difference?”
The Primary Difference: Right of Survivorship
Right of survivorship means what happens to the asset, your property, should one of the registered owners die.
When the property is held in by joint tenants, the death of one results in their portion of the property passing to the other joint tenant(s) without forming part of the deceased’s estate. Tenants in Common is different because the death of one of the owners results in their share of the property forming part of his or her estate.
When buying a property, it’s very important that your lawyer brings up the option of holding the asset in a joint tenancy or as tenants in common.
Which is better for you?
The next question you are probably asking yourself is what difference does it make to me whether I hold our asset as joint tenants or as tenants in common? It makes a big difference.
Example: Two Groups – One Cottage
You and your wife decide to buy a cottage. You probably aren’t concerned with being able to sell your portion of the cottage to someone else and you probably want to leave your portion to your spouse anyway.
In this scenario it makes sense to own the cottage as joint tenants. When one of the spouses die the cottage will transfer to the other automatically and you avoid having to pay estate administrative taxes e.g. probate fees.
Tenants in Common
Let’s say you and three friends decide that you want to buy a cottage and that each of you wants to own 25% of that cottage it would probably make sense that you would own that cottage as tenants in common.
If you hold an asset as tenants in common each person owns a certain percentage of that asset. The upside is that each of you could then sell your 25% interest to someone else or leave it to your beneficiaries in your will. This especially important as your share will not go to the remaining tenants in common when you die.
This is an important decision when deciding to buy a property.
Don’t hesitate to contact us with any questions concerning your purchase or sale or have us review your agreement all of which will be done without charge.
I own a property but my deed doesn’t say if I’m joint or common.
Without stating in the deed that it is held as joint tenants or tenants in common it is presumed that the property is owned as tenants in common.
Can a property have more than two joint tenants?
Yes, it can have as many joint tenants as needed.
Do tenants in common required to have an equal share in the property?
No. Tenants in common can have whatever percentage they want.