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. Joint Owned Property

    Any property held in the name of two or more parties. The two ...
  4. Tenancy At Sufferance

    An agreement in which a property renter is permitted to live ...
  5. Tenants By Entirety - TBE

    A method in some states by which married couples can hold the ...
  6. Tenants In Common - TIC

    The co-owners of an undivided interest in real property. Tenants ...
Related Articles
  1. Investing

    The Benefits And Pitfalls Of Joint Tenancy

    This arrangement allows beneficiaries to access your account without having to go to court.
  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. 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.
  6. Investing

    How To Rent Out Your Spare Room

    If you have extra space in your house, why not rent it out, especially during the school term, to help pay the mortgage?
  7. Personal Finance

    State Laws Dictate Division Of Joint Property

    In breakup, divorce or death, community or common law will determine how property is divided.
RELATED FAQS
  1. Among the following property ownership arrangements, which may be entered into by ...

    The correct answer is b): Tenancy by the entirety and Community property are ownership arrangements that can only be between ... Read Answer >>
Hot Definitions
  1. Restricted Stock Unit

    Compensation offered by an employer to an employee in the form of company stock. The employee does not receive the stock ...
  2. Operating Ratio

    A ratio that shows the efficiency of a company's management by comparing operating expense to net sales. Calculated as:
  3. Expense Ratio

    A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual ...
  4. Pro Forma

    A Latin term meaning "for the sake of form". In the investing world, it describes a method of calculating financial results ...
  5. Trumpcare

    The American Health Care Act, also known as Trumpcare and Ryancare, is the Republican proposal to replace Obamacare.
  6. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
Trading Center