Joint Tenancy vs. Tenants in Common: What's the Difference?
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Jenn Morson

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There are several ways to own residential or commercial property with another individual. Two ways to hold title together are joint occupancy and tenancy in typical agreement. These kinds of real residential or commercial property ownership arrangements each have advantages and disadvantages depending upon your specific needs and circumstances.

People may choose a joint tenancy or tenancy in common contract when they are a married or cohabitating couple, member of the family, business partners, investment partners, or perhaps roomies picking to own residential or commercial property together. Whatever your reason, discovering the benefits and downsides of a joint tenancy vs. tenancy in common contract will help direct you through the residential or commercial property ownership process.

Note that while the term "tenancy" is used in rental scenarios, in this context it describes ownership interest in a residential or commercial property. The owners in these plans would be described as joint tenants or renters in typical and are not occupants.

What is joint occupancy?

When two or more people buy a residential or commercial property together with equivalent interest in the residential or commercial property and equal rights, this is described as joint tenancy. Perhaps the most typical form of joint tenancy ownership is that of a couple.

In order to be thought about joint occupancy, 4 conditions need to be met:

- The tenants need to acquire the residential or commercial property at the exact same time

• Equal residential or commercial property interest by each renter
• All tenants need to acquire the title deed from the very same file
• Equal rights of ownership should be exercised by all occupants
  
  According to Gagan Saini, the director of acquisitions of JiT Homebuyer, a genuine estate services and financial investment firm in Metairie, Louisiana, a joint tenancy arrangement needs owners to settle on any choices about the residential or commercial property. "This includes decisions such as when to sell the residential or commercial property, who is responsible for repair and maintenance, and how the revenues from the sale of the residential or commercial property are divided," Saini says.
  
  Advantages of joint occupancy
  
  When you hold title in a joint tenancy, if among the co-owners passes away, the ownership rights automatically transfer to the staying owner or owners. For instance, if Bob and Cindy are married, and Bob dies, Cindy will immediately become the complete owner of the residential or commercial property. There will be no need to go to probate, and Cindy will not owe any transfer taxes. If the residential or commercial property were owned in joint tenancy by single individuals, the remaining owner or co-owners would likewise avoid the probate process, although they would need to claim the inherited residential or commercial property as a present.
  
  The automatic transfer of ownership to your co-owners, as above, is described as the right of survivorship.
  
  Additionally, joint occupancy guarantees equivalent rights and ownership for all parties. So if two people own the residential or commercial property, each controls 50%. If there were five owners, each would control 20% interest in the residential or commercial property.
  
  Disadvantages of joint tenancy
  
  Perhaps the most significant downside of joint occupancy relates to lenders. If among the occupants owes a debt, a lender has the power to terminate a joint occupancy even if the other co-owners have nothing to do with that financial obligation. If you are seeking joint tenancy with somebody who has bad credit, significant financial obligation, or is prone to liability by occupation, you will need to be familiar with these threats.
  
  If you do not want your ownership to move automatically to the other owners and would instead it choose to go to your successors, joint occupancy is also not a good option for you.
  
  Another disadvantage of joint tenancy is that if you and the other co-owners can not reach an agreement on what to do with the residential or commercial property, you would need to submit a lawsuit, described as a partition action. Your co-owners would be needed to react to the partition action, which can be expensive and time-consuming.
  
  What is occupancy in typical?
  
  If several individuals hold title under occupancy in typical, this suggests that each person can select to sell their ownership interests in the residential or commercial property at any time. Unlike with joint tenancy, a tenancy in common agreement permits for multiple owners to own different portions of the whole residential or commercial property. Although one tenant might potentially own simply 30% of the residential or commercial property while the other owners own 35% each, this does not imply that certain areas of the residential or commercial property are owned by those holding the larger ownership portion. The entire residential or commercial property is offered to each owner, regardless of portion, which is called undivided interest.
  
  Additionally, on the event of their death, each co-owner might select who will be the beneficiary of their ownership as part of their estate.
  
  An occupancy in common may also be described as a TIC arrangement. The acronym means tenancy in common.
  
  Advantages of occupancy in common
  
  Under a tenancy in typical title, each owner does not need to have equal shares. So in theory, one owner could have 25% ownership while the other has 75%.
  
  This kind of joint ownership is perfect for groups of individuals wanting to share residential or commercial property or married couples who, for whatever factor, do not wish their share of the residential or commercial property to move immediately to the making it through partner upon their death. For instance, if a person marries a widow with kids, the couple might wish to collectively own residential or commercial property through tenancy in typical so that the widow can leave her share of the residential or commercial property to her children instead of her partner.
  
  Disadvantages of occupancy in typical
  
  If you do not have a will and hold title by means of tenancy in typical, your share of the residential or commercial property will be distributed according to your state's probate laws. Under tenancy in typical, there is no right of survivorship.
  
  If you share ownership through a tenancy in common title, your co-owners can sell their part without your say, indicating that in theory owners might find themselves co-owning residential or commercial property with complete strangers. For instance, if three roomies hold title under occupancy in common and one of the roomies decides to sell their part of the ownership, the staying 2 roommates have no state concerning this decision.
  
  Joint occupancy vs. occupancy in typical
  
  The crucial differences between these 2 alternatives for residential or commercial property ownership are:
  
  Choosing which ownership works for you
  
  When choosing whether joint tenancy or occupancy in common is more matched for your requirements, the very first action is to make certain you understand the distinctions between both of these co-ownership choices. Choosing to own as occupants in common vs. joint occupancy needs understanding of both options.
  
  According to Troy Robillard of Premiere Plus Real Estate in Fort Myers, Florida, no matter your situation, you will need to consider all the benefits and disadvantages of each structure along with seek advice from experts. He states, "Whether you're a couple, service partners, or financiers, choosing the proper ownership structure needs careful factor to consider of your objectives and preferences. Consulting with a legal expert or realty expert can supply important guidance customized to your distinct scenarios, guaranteeing you make informed decisions that line up with your long-term strategies."
  
  This article is for educational purposes. This content is not legal recommendations, it is the expression of the author and has actually not been examined by LegalZoom for accuracy or changes in the law.
  
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