4 minute read

Tenancy in Common vs Joint Tenancy - What You Need to Know

Tenancy in common and joint tenancy are both ways of sharing ownership of property. But how do they differ? Trust & Will explains what you need to know.

Patrick Hicks

Patrick Hicks, @PatrickHicks

Head of Legal, Trust & Will

If you want to own property with one or more individuals, there are several ways you can structure your ownership. Two ways you can hold property title with another person include tenancy in common and joint tenancy. These share the same function of allowing two or more people to own property together, but they have several key differences. Trust & Will shares an overview of tenancy in common vs. joint tenancy, and how you should choose between the two. 

What Is Tenancy in Common?

Tenancy in common is one method of owning real estate together with another person (or more). This ownership structure allows each owner to hold equal shares of property interest (ownership). They can also opt to allocate different ownership percentages. For instance, one owner (tenant) could hold 60 percent interest while the other holds 40 percent interest. 

To learn more about this specific ownership structure, as well as type of deed, be sure to check out our guide “What is Tenancy in Common.” 

What Is Joint Tenancy?

Another option for owning property together with other owners is joint tenancy. Joint tenants all own equal shares of the property. For instance, two owners would each hold 50 percent interest. If the number of joint tenants is increased to three, then each owner holds one-third each. The value of each share is proportionate to the number of joint tenants. Ready Everything You Need to Know About Joint Tenancy for an in-depth explanation of how joint tenancy works.

Tenancy in Common vs Joint Tenancy - What’s the Difference? 

At first glance, tenancy in common and joint tenancy may appear to be the same. After all, they both help owners of property achieve the same objective of owning property jointly with others. However, there are some critical differences between the two. Namely, the differences come down to timing of ownership and the nature in which property interest can be divided.

Here are the differences spelled out:

  • When using tenancy in common, joint owners of property have flexibility in how they transfer property title. The joint owners can transfer property together simultaneously from a single owner. They can also choose to purchase ownership from different owners, and at different times.

  • Co-owners using joint tenancy have to take title at the same time from the same deed. They cannot purchase ownership at different times.

  • Joint tenancy requires each party to hold equal shares of property interest. For instance, two owners must split property interest precisely in half. The shares of property interest changes proportionally to the number of owners.

  • Tenancy in common provides more flexibility in the nature in which property interest is divided amongst owners. For instance, one owner could hold the majority share of interest while the secondary owner holds the remainder share. 

Joint Tenancy vs Tenants in Common Pros and Cons

Joint tenancy vs tenants in common: which is better? While one type of joint ownership structure may seem more favorable to you, each has its own set of advantages and disadvantages. Ultimately, you and your co-owners should select the ownership structure that serves in everyone’s best interest.

Tenancy in common is the most flexible arrangement for each party involved. Each co-owner can buy, sell, and bequeath their personal share of property interest without affecting the other tenants. That means they can easily bequeath their property share in their Estate Plan. When they pass away, their heir can inherit this property share, for instance. A tenant can also easily terminate their relationship with other tenants by selling or gifting their share to a third party. Each common tenant is not necessarily bound to the other owners, providing breathing room for unanticipated changes or circumstances. Further tenancy in common allows parties to hold unequal shares of property interest. 

Joint tenancy requires each co-owner to hold equal shares of property. Further, co-owners must transfer the deed at the same time. In this sense, joint tenancy is rigid compared to tenancy in common. When one co-owner passes away, their property interest is absorbed by the surviving owner(s). This creates some ease in estate planning for the owners since the outcomes are predetermined. For this reason, joint tenancy is frequently used between married couples who are buying property together.

One disadvantage of both tenancy in common and joint tenancy to note is related to creditors. If a co-tenant has debt that is defaulted upon, the creditor can pursue the tenant’s property to satisfy this debt. Legal proceedings could force the property interests to be divided and sold. One tenant’s actions can affect the other tenants. Seeking legal advice before entering a legal agreement with other individuals is always recommended.

How Tenancy in Common & Joint Tenancy Can Affect Your Estate Plan

As you may have gathered, your choice between tenancy in common vs. joint tenancy can affect how you plan your estate. For instance, in the case of joint tenancy, your share of property interest will be absorbed by your surviving co-owner(s). In this case, the deed structure overrides anything you might want to put in your Will or Trust, so it’s important to be careful so as not to include any conflicting instructions in your Estate Plan. 

In contrast, tenancy in common does give you the flexibility to transfer your personal share of property interest to another party, independent of the desires and motivations of your co-owners. When you pass away, you are legally able to bequeath this share to your heir, for instance. Take care to name this asset and your beneficiary designation in your Estate Plan.

Any type of purchase or acquisition of real property should always remind you to consider your Estate Plan and update it as needed. This is because real property is typically an individual’s single, or one of, most important assets of value. When you add any property to your name, or sell property, your Estate Plan can and should be reviewed. That way, you can ensure that it continues protecting your property and loved ones in case you were to pass away. 

Not sure where to begin? Don’t worry! We’ve got you covered. Whether you wish to set up a Will or a Trust, or need help deciding between the two, Trust & Will provides the education and resources to support users through the process. Our online platform makes it easy to set up your estate planning documents, with support available along the way. As added bonuses, our products are affordable and can be completed from the comfort of your own home! With just a few simple steps, you can achieve peace of mind knowing that your property is protected for your future generation.

Then direct the reader to T&W’s estate planning LP so they can create or update their estate plan today.

Is there a question here we didn’t answer? Reach out to us today or Chat with a live member support representative!

Trust & Will is an online service providing legal forms and information. We are not a law firm and we do not provide legal advice.