Tenants in Common Definition

In recent months and years many folks have lost their homes, frequently because they did not understand or correctly analyze certain terms in their mortgages. Often real estate agents and loan officers assume you know what you need to know, so they are not proactive in defining many terms for you. In this context it becomes more important than ever to understand property law concepts.

One very important area is where more than one person owns a property---husband and wife, business partners, or other entities.

You may hear the term tenants in common. This is not the same as joint tenants.

In a joint tenancy, each owner owns the same proportion of the property and the co-owners have a right of survivorship. This means that if one of the owners dies, the other owner or owners still own the property. If there is more than one owner at this stage, each again has an equal share of ownership. Neither of the co-owners has the right to sell his or her share apart from the other owner. This is the most common type of ownership of a home by married couples.

In some states you must have agreed to a joint tenancy in writing, or the state will presume the property is owned by tenants in common.

In a tenancy in common, the owners may own equal or unequal shares of the property. There is no right of survivorship for tenants in common. Thus, if one of the owners dies, the others still own their portion of the property, but the part owned by the deceased will be part of his or her estate; it will therefore be inherited by whoever is designated as owner under inheritance rules of the respective state.

Each owner has the right to sell his or her portion of the property at any time; this does not affect the ownership of the other partner(s).

As an example, take a look at ownership of an apartment building with ten apartments:

1. Two people could purchase the apartment building, with each owning equal shares of the building just as they might own their own home, with right of survivorship. This would be a joint tenancy.

2. Two people could purchase the building, with one person contributing 60% of the purchase price. The building could therefore be divided with that person owning six specific apartments in the building. That person would have the right to sell any or all of those apartments. If that person died, then his or her heirs would own those apartments. This would be a tenancy in common.

Thank you to Mary Lou Derksen for this "Tenants in Common Definition" article

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