Ownership of property can take several different forms, such as sole ownership by one person or concurrent ownership by two or more persons. Within the category of concurrent ownership, there are various arrangements by which people can own property together. The form of concurrent ownership may depend on facts such as how and when the property was acquired and whether the co-owners are spouses or non-spouses. People who own property together should be concerned with the form of ownership because it can affect their rights with the property during their lives and the disposition of the property after their deaths. This article will discuss different forms of concurrent ownership and characteristics of each.
Individuals who are not married to each other (non-spouses) may own property together in one of two forms: Tenancy In Common or Joint Tenancy. Tenancy In Common can be thought of as the default form of co-ownership. When two or more individuals acquire property together, they will be regarded as Tenants In Common if no statement to the contrary is documented in the ownership title. Each of the Tenants In Common owns a percentage share of the property, and those percentages can be equal or unequal, as determined by the percentage contributed by each to acquire the property. Each of the Tenants In Common has the right to access, utilize, sell, and even encumber with debt their portion of the property. When one of the Tenants In Common dies, that owner's share of the property will be included in his or her estate and go through probate. The surviving Tenants In Common do not have an automatic right to inherit the deceased owner's share of the property. The deceased owner's share will be inherited by the beneficiary designated in the deceased owner's will, which may or may not be the surviving Tenants In Common, or by the state laws of intestate if the owner dies without a will.
Joint Tenancy can be thought of as the alternative form of co-ownership. If two or more individuals wish to own property as Joint Tenants, they must be explicitly documented as such in the title. To form a Joint Tenancy, all of the owners must have acquired the the property at the same time, hold the same title to the property, own equal shares of the property, and have equal rights to possess the property. If any one of these four requirements fails to be true during the life of a Joint Tenancy, then the ownership will convert to a Tenancy In Common. As with the Tenancy In Common, each of the Joint Tenants has the right to access, utilize, sell, and encumber the property. The main difference in the Joint Tenancy form of ownership is the provision for a deceased owner's share of the property to bypass probate and be automatically inherited by the surviving Joint Tenants, in which case the ownership is named Joint Tenants With Right Of Survivorship. In some states, such as Texas, the words Joint Tenants With Right Of Survivorship must be written in the title. If the ownership is recorded only as Joint Tenants and the words With Right Of Survivorship are missing, then the right of survivorship will not be assumed, and the deceased owner's share will be included in his or her estate.
Individuals who are married to each other (spouses) may have an additional form of ownership available. Tenancy By The Entirety is a form of co-ownership between spouses available in only about half of the states. This form of ownership is very similar to Joint Tenancy. Tenancy By The Entirety includes the four requirements for Joint Tenancy with an additional fifth requirement of marriage between the owners. Unlike with Joint Tenancy, one spouse cannot unilaterally terminate the Tenancy By The Entirety by breaking one of the requirements, such as selling his or her half of the property. Tenancy By The Entirety can provide the same benefit of Joint Tenancy With Right Of Survivorship by allowing the deceased spouse's share of the property to bypass probate and be automatically inherited by the surviving spouse.
Community Property is another form of co-ownership between spouses available in only some states: Alaska, Arizona, California, Louisiana, Idaho, Nevada, New Mexico, Texas, Washington, and Wisconsin. Community Property is defined as any property accumulated by either spouse during marriage except for gifts and inheritances. Each spouse owns a one-half, undivided interest in all Community Property, regardless of his or her individual contributions to acquire or maintain the property. Spouses can own Community Property as either Tenants In Common or as Joint Tenants. The mere fact that a property is classified as Community Property does not dictate how the property will be disposed of after the death of a spouse. The laws of Community Property define the rights of each owner while both spouses are still living, but the disposition of Community Property after one spouse's death will depend on whether the spouses were Tenants In Common or Joint Tenants With Right Of Survivorship.
These are the most common forms of concurrent ownership between individuals. One form of ownership does not stand out as the best because each form has different characteristics that may achieve the goals of different people. You may want to seek legal counsel for more guidance on which form of concurrent ownership would best achieve your goals. Content from this article should not be interpreted as legal advice. Content from this article should be regarded as general and generic because each legal jurisdiction can have variations in the interpretation and application of property laws and probate laws. You should consult with an attorney for more information regarding property laws and probate laws before making any changes to ownership registrations or other legal documents.
