The key difference between joint tenants and tenants in common lies in their rights of survivorship and the distribution of shares upon the death of a co-owner. When multiple individuals co-own a property, they can do so either as joint tenants or tenants in common.
In 2020-21, 80% of Shared Ownership purchases were made by first time buyers. This guide explains some of the key differences between joint tenants and tenants in common if you are among the many people considering a shared ownership agreement.
What Is the Difference Between Joint Tenants and Tenants in Common?
Joint Tenant
Joint tenancy is a form of property ownership where two or more individuals hold equal shares of the property with the right of survivorship. The right of survivorship means that if one joint tenant passes away, their share automatically transfers to the surviving joint tenants, without the need for probate or going through the deceased’s estate.
This feature ensures that the ownership of the property remains consolidated among the surviving joint tenants. Joint tenants have an undivided interest in the whole property, meaning that they collectively own the entire property, rather than owning specific individual portions.
Tenants in Common
Tenancy in common is a type of property ownership where two or more individuals also hold shares of the property, but they may have unequal ownership percentages. Unlike joint tenancy, tenants in common do not have the right of survivorship.
If one tenant in common passes away, their share is distributed according to their will or intestate laws, and it does not automatically pass to the other co-owners. Each tenant in common has a distinct transferable interest in the property, which is proportional to their ownership percentage.
How Are Joint Tenancies Created?
Joint tenancies are created by including specific language in the deed or title. The deed must clearly state the co-owners’ intention to hold the property as joint tenants with the right of survivorship.
Joint tenants typically acquire the property at the same time and through the same deed or legal document. This means that all joint tenants must become owners simultaneously through a single transaction. The deed must explicitly state the intention to create a joint tenancy with the right of survivorship.
How Are Tenancies in Common Created?
Tenancies in common are the default form of co-ownership if the deed or title does not explicitly state the ownership as joint tenancy. When a property is purchased or transferred without any specific language indicating joint tenancy, the co-owners are presumed to be tenants in common.
Tenants in common can acquire the property at the same time and through the same deed, similar to joint tenants. However, they may also acquire their interests at different times or through separate transactions.
For example, if one individual owns a property and later decides to add another person as a co-owner, they can do so by transferring part of their ownership to the new co-owner through a deed.
Can Joint Tenants Have Different Ownership Percentages in the Property?
No, joint tenants must have equal ownership percentages in the property. Each joint tenant is entitled to an equal share of the property. For example, if there are three joint tenants, each will have a one-third share in the property.
Can Tenants in Common Have Different Ownership Percentages in the Property?
Yes, tenants in common can have different ownership percentages. For example, one co-owner may have a 60% share, while another may have a 40% share. The ownership percentages can be divided in any manner agreed upon by the co-owners.
Can Joint Tenants Sell or Transfer Their Ownership Interest Without the Consent of the Other Co-owners?
No, joint tenants cannot unilaterally sell or transfer their ownership interest without the consent of all other joint tenants. Since joint tenants have equal shares in the property, any sale or transfer of their share would affect the ownership rights of the other joint tenants. The unanimous agreement of all joint tenants is required for any transfer of ownership.
Can Tenants in Common Sell or Transfer Their Ownership Interest Without the Consent of the Other Co-owners?
Yes, tenants in common have the right to sell, transfer, or gift their ownership interest without needing the consent of the other co-owners. Each tenant in common has a separate and transferable interest, and they can choose to sell their share to a third party without affecting the ownership rights of the other tenants in common.
What Happens to a Joint Tenancy if One Co-owner Wants to Sell Their Share?
If one joint tenant wants to sell their share, they cannot do so without the consent of the other joint tenants. Since joint tenants have an undivided interest in the property, any change in ownership can only occur with the agreement of all joint tenants. If all joint tenants agree, they can sell the property or their respective shares to a new owner, but the right of survivorship is lost for the selling co-owner.
What Happens to a Tenancy in Common if One Co-owner Wants to Sell Their Share?
A tenant in common can sell their share without the consent of the other co-owners. The new owner of the sold share becomes a tenant in common with the remaining co-owners. This means that after the sale, there will be new co-owners with potentially different ownership percentages.
What Happens if a Joint Tenant Dies?
If a joint tenant dies, their ownership interest passes automatically to the surviving joint tenants, without the need for probate. This is the principle of the right of survivorship, where the surviving joint tenants inherit the deceased’s share by operation of law. You may also consider equity releases.
What Happens if a Tenant in Common Dies?
If a tenant in common dies, their share is transferred according to their will or the intestate laws of the state. It does not pass automatically to the other co-owners, as is the case with joint tenancy and the right of survivorship. The deceased’s share becomes part of their estate, and the executor or administrator of the estate is responsible for distributing it according to the decedent’s wishes or the laws of inheritance.
Can Joint Tenancy Be Converted Into Tenancy in Common, and Vice Versa?
Yes, joint tenancy can be converted into tenancy in common by severing the joint tenancy. This can be done by one joint tenant selling or transferring their interest to another person, thereby breaking the equal ownership requirement. Once the joint tenancy is severed, the co-owners become tenants in common with distinct ownership interests.
Similarly, tenants in common can convert their ownership into joint tenancy by re-titling the property with specific language indicating joint tenancy. They would need to draft and record a new deed reflecting their intention to hold the property as joint tenants with the right of survivorship.
