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When buying a property, you will most likely be asked several questions. For instance, you’ll be asked if you want to own it as a “tenant in common” or “joint tenants.” However, this question mostly pops up if you’re getting a property with a partner.
Now, if you’ve never understood what these two terms mean, you may not know which one would be best for your circumstances.
That’s why we’ve decided to whip up this article to explore answers to the question, “what is the difference between joint tenants and tenants in common.” You’ll make an informed decision after reading this guide.
All about Joint Tenants
When it comes to housing, specifically acquiring properties, you’ll come across the terms joint tenants or joint tenancy. Well, they mean the same thing.
Joint tenancy means a legal arrangement in property acquisition where you and your partner - could be your spouse, friend, or relative - own an equal share of the property.
When creating this agreement, all the parties involved have to be present. It is usually established through a deed created during the purchase phase.
By implication, all the parties who own the property are entitled to the benefits and downsides of the house. That means they have to share the profit equally if they rent out the property. Likewise, they both have to contribute to paying taxes on the property as well as investing in the maintenance of the property.
Now, if one party does not fulfill its financial obligation on the property, the other party has to step in since both parties have equal rights to the property.
Right of Survivorship
Part of the joint tenants’ feature is the right of survivorship. This right ensures that the death of one party means the other party becomes the complete owner of the property automatically. As a result, you would avoid probate or the process of moving the asset of the person to an estate.
Pros of Joint Tenancy
- You will not need a will to clear the property in the case of the death of one of the partners.
- It avoids the lengthy process of assuming full ownership of property.
- All parties in a joint tenancy enjoy and share the benefits and responsibility of maintaining the property, including debts.
Cons of Joints Tenancy
- Marital-related issues can complicate joint tenancy.
- The deceased partner’s share cannot be passed to their heir; the other partner takes all.
All about Tenants in Common
Like joint tenancy, tenants in common can occur between more than two people.
In this legal agreement, every party owns a portion or percentage of the property.
There is no limit to what the property could be used for. It could be used for both residential and commercial purposes.
Every party that owns a share of the property is referred to as a tenant in common.
Unlike joint tenancy, this agreement can be created at any time. More so, more individuals interested in the property can join the agreement even after a couple of others have initially created it.
You can choose to sell your portion of the property.
Now, in a tenant in common, individuals in the agreement cannot exactly lay claim to any part of the property.
When it comes to taxes, tenants in common will not have to pay separate taxes based on the percentage of the property they own. They would all receive one tax.
Right of Survivorship
In the case of death, the share of the deceased tenant in common goes to a family member or a legally elected heir.
Tenants in Common vs Joint Tenants
|Joint Tenants||Tenants in Common|
|Both parties own the property equally, 50-50.||All parties may not necessarily own the property equally. They may own different percentages of the property.|
|The death of one party automatically transfers total ownership of the property to the surviving owner.||The death of one party transfers their percentage to the legal heir of the diseased party.|
|The percentage you own is not influenced by how much contribution you make to the maintenance of the house.||Your contribution to the property determines how much percentage of the property you have.|
FAQs: What Is the Difference between Joint Tenants and Tenants in Common?
Which Is Better, Joint Tenants or Tenants in Common?
The better option depends on the status of the person with whom you’re buying the property. In general, if you are buying with your partner, opting for the joint tenant option is best. It has the right of survivorship that automatically transfers ownership of the property to you if your partner dies - ownership will not go to the heir of your partner.
What Happens When One of the Tenants in Common Dies?
In tenants in common, the death of one of the tenants means that their share of the property would be automatically transferred to who they elected as their legal heir before they died. In essence, it does not go to the other tenant.
Can You Switch from Joint Tenants to Tenants in Common?
Yes, you can switch from joint tenants to tenants in common.
How Do I Know if My Property Is Held as Tenants in Common?
You can confirm the joint ownership type on your property by checking the trust deed (also declaration of trust), property lease, or property transfer documents.
How Many Tenants in Common Can You Have?
The beauty about tenants in common is that there’s no limit to the number of owners. The owners can range from 2 to 100 people.
Do You Pay Inheritance Tax if You Are Joint Tenants?
If your joint tenant were your spouse, you would not need to pay inheritance tax.
Conclusion: What Is the Difference between Joint Tenants and Tenants in Common?
Now that this guide has answered the question “what is the difference between joint tenants and tenants in common” in detail, it should not be difficult for you to decide what works best for you.
In general, if you’re buying the property with your spouse, opt for the joint tenancy. But if you’re buying with friends, then you already know that tenants in common ensure your share goes to your legally elected heir when you die.
Reference Legal Explanations
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" What is the Difference Between Joint Tenants and Tenants in Common?". Legal Explanations. Accessed on December 2, 2023. https://legal-explanations.com/blog/what-is-the-difference-between-joint-tenants-and-tenants-in-common/.
" What is the Difference Between Joint Tenants and Tenants in Common?". Legal Explanations, https://legal-explanations.com/blog/what-is-the-difference-between-joint-tenants-and-tenants-in-common/. Accessed 2 December, 2023
What is the Difference Between Joint Tenants and Tenants in Common?. Legal Explanations. Retrieved from https://legal-explanations.com/blog/what-is-the-difference-between-joint-tenants-and-tenants-in-common/.