Types of Property Ownership
A great amount of property is owned by more than one individual or entity and this is often referred to as ‘joint ownership'. However, there are two different types of joint ownership and real estate salespeople are often asked the difference between ‘joint tenants' and ‘tenants in common'.
Joint tenants own property in equal shares, depending on the number of owners. For example, if there are two joint owners, they own half of the property each. Or if there are six joint owners, they would each own one-sixth of the property.
When a property owned by joint tenants is sold, each joint tenant (or owner) has an equal interest in that sale and each is required to individually sign the sale contract. Should a joint tenant die, their interest in the property automatically passes to the survivor/s. Practically, this means that if there were only two original joint tenants, the survivor would assume sole ownership in the event of death. In the example of a property with six joint tenants, the surviving tenants would each finish with a fifth share. The interest of a joint tenant cannot be bequeathed.
Tenants in common may own property in unequal shares and this type of ownership is usually established at the time of purchase, however the specific shares can be altered at any time, subject to all parties agreeing on the change. This type of ownership is more common with investment properties and each tenant in common is able to deal with their interest individually. This means that they are able to leave their portion of ownership in their will to anyone they choose and the other tenants in common have no legal claim to it.
As a purchaser, it is important that you consider the type of ownership you wish to establish if you are purchasing property. There is an important difference between the two types of ownership and if you do not specifically stipulate a request for ‘tenants in common' on a transfer title, ‘joint tenancy' will prevail.