JOINT TENANTS versus TENANTS IN COMMON
What is the Difference?
Two commons ways to own real property (i.e., land) are “tenants in common” and “joint tenancy.” When purchasing land with another person or group of people, how you hold ownership is an important decision. There are significant differences between “tenants in common” and “joint tenancy.”
Tenants in Common
If, for example, you and another person each invest 50% to purchase land as tenants in common, each of you have the right to your percentage of the property. In other words, each of you owns only 50% of the property. This means that if something happens to you, your 50% would be passed to your heirs, not to the other 50% owner.
This arrangement is often seen among unrelated parties, because each party has control over his or her portion of the property and who inherits it. A party can also sell or transfer his or her ownership interest with or without consent of the other owners.
Joint tenant ownership (or joint tenants with rights of survivorship) generally means that both parties own 100% of the property. This means ownership of the property is not divided. “Rights to survivorship” means the property automatically passes to the other party outside of a will, avoiding probate.
An individual owner cannot, however, sell his or her interest in the property without the authorization of the other owners. Ownership as joint tenants is often used by married couples. If you choose to purchase property using joint tenancy, a full understanding of what it means is essential.
If you have questions or are in need of an attorney regarding property matters, please contact the PIPPIN LAW FIRM at (701) 572-5544 or visit our website at www.pippinlawfirm.com.
This article provides a broad overview of two common legal concepts. It is not intended to be and should not be construed as legal advice for any particular fact situation.