What is 'Tenancy In Common'

Tenancy in common allows two or more people ownership interests in a property. Each owner has the right to leave his share of the property to any beneficiary upon the owner's death. Tenancy in common is different than joint tenancy because the transfer of the property to a beneficiary in the event of an owner's death is different: in a joint tenancy agreement, the title of the property is passed to the surviving owner, while in a tenancy-in-common agreement, the title can be passed to a beneficiary of the owner's choosing.

BREAKING DOWN 'Tenancy In Common'

When two or more people own property as tenants in common, all areas of the property are owned equally by the group. For this reason, an individual may not claim ownership to a specific part of the property.

Ownership Interests

Whereas tenants in common may not claim ownership to an individual part of a property, they may have different ownership interests. For example, Sarah and Debbie may each own 25% of a property, while Leticia owns 50%. Because tenants in common may be created at various times, an individual may obtain an interest in a property years after the others entered into a tenancy in common ownership.

In contrast, joint tenants obtain equal shares of a property with the same deed at the same time. As with contract terms for tenants in common, terms for joint tenants are detailed in the deed, title or other legally binding property ownership documents. Some states have joint tenancy as the default ownership for married couples, whereas others have tenancy in common.

Rights of Survivorship

When an owner dies, what happens to ownership of the property depends on the type of ownership defined by the contract. Tenants in common have no rights of survivorship. Unless the deceased person’s will specifies his interest in the property is to be divided among surviving owners, a deceased tenant in common’s interest belongs to his estate. Conversely, with joint tenants, the deceased owner’s interest is automatically transferred to the surviving owners. For example, when four joint tenants own a home and one tenant dies, each of the three survivors ends up with a one-third share of the property.

Breaking a Joint Tenancy Agreement

A joint tenancy is broken when one or more tenants sell their interest in the property. For example, one or more co-tenants buy out the others, the property is sold and proceeds distributed equally among the owners, or a partition action is filed, letting an heir sell his stake in the property.

RELATED TERMS
  1. Joint Tenancy

    A type of property right where two or more people own or rent ...
  2. With Benefit Of Survivorship

    A form of joint tenancy ownership where property passes to the ...
  3. Tenancy At Sufferance

    An agreement in which a property renter is permitted to live ...
  4. Tenants In Common - TIC

    The co-owners of an undivided interest in real property. Tenants ...
  5. Tenants By Entirety - TBE

    A method in some states by which married couples can hold the ...
  6. Title

    The right to the ownership and possession of any item that may ...
Related Articles
  1. Investing

    Holding Titles On Real Property

    Find out how best to claim and convey ownership on your assets.
  2. Managing Wealth

    Nonfreehold Estates In Real Property

    If you have an interest in real estate, read on to find out which type of property you have.
  3. Investing

    Buying a House with Tenants: A Quick Guide

    Before buying a house with tenants, know the risks and responsibilities you're taking on.
  4. Retirement

    Could Being a Landlord Pay for Your Retirement?

    If you have the money to buy them and the energy to run them – or the funds to pay a good manager – rental properties can help pay for your retirement.
  5. Managing Wealth

    11 Mistakes Inexperienced Landlords Make

    Avoid these pitfalls if you considering purchasing a rental property.
  6. Investing

    Top 4 Nightmares For Real Estate Investors

    Renting out your property is not without risks; the good news is, they don't have to keep you up at night.
  7. Investing

    Tips For The Prospective Landlord

    Investing in rental property can generate serious income, but there's more to it than collecting rent.
  8. Investing

    Investing in Property Out of State

    If you can't afford property close to home, consider taking the real estate plunge elsewhere in the country.
RELATED FAQS
  1. If two people own a securities account, listed as joint tenants-in-common, it means:

    A. They each have an undivided interest in the propertyB. If one dies, that person's interest does not automatically ... Read Answer >>
Hot Definitions
  1. Price Elasticity Of Demand

    A measure of the relationship between a change in the quantity demanded of a particular good and a change in its price. Price ...
  2. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
  3. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Down Round

    A round of financing where investors purchase stock from a company at a lower valuation than the valuation placed upon the ...
  6. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
Trading Center