This article is for informational purposes only and is not intended as professional advice; always consult your qualified advisors before making business decisions.
When it comes to understanding land tenancy, it’s important to know the difference between joint tenancy and tenancy in common. Both of these concepts refer to the rights of property owners to share ownership of a piece of real estate, but understanding how each works is key for making informed decisions. In this blog post, we will explain what tenancy is and discuss the differences between joint tenancy and tenancy in common so that you can make an educated decision when taking title.
Tenancy refers to the legal relationship between two or more people and a piece of real estate. In this type of arrangement, one person is identified as the landlord or landowner, while the other is considered the tenant. The tenant has a right to occupy and use the property for an agreed upon period of time subject to certain conditions set by the landlord.
Joint Tenancy is the holding of property wherein each owner holds an undivided and equal interest in the property and there exists a right of survivorship. It is the most common form of co-ownership of property used by married couples. Upon the death of a joint tenant, his or her interest in the property passes to the surviving joint tenant(s). Joint tenancy must be specifically designated in an instrument of conveyance and is never presumed without such a designation.In Joint Tenancy, one owner can’t simply sell their interest without the consent of all the other owners. Estate tax on the property is delayed when passed to another owner in the event of the death of one of the owners. For example, if the owners were married and one spouse passed away, the property would transfer to the surviving spouse with no estate tax. When the other spouse passes and the property is passed down to heirs the estate tax would then be applied.
Tenancy in common is a real estate ownership arrangement by two or more people who hold undivided interests, without right of survivorship. Interests in the property do not need to be equal (each person can own a different percentage of the property). Each person is entitled to possession of the property according to their proportionate share and ownership interest in the property can be obtained at different times. Ownership pertains to the property as a whole and owners can’t claim specific parts or aspects of the property. With Tenancy in Common there is no right of survivorship, and in the event of the death of an owner their interest passes to their heirs and not the remaining owners. Tenancy in common allows for owners to sell their ownership interest in the property at any point without the agreement of the other owners and without affecting the other owners’ interests.
By understanding the differences between joint tenancy and tenancy in common, you can make an educated decision when it comes to investing in land. Both forms of tenancy have their own unique benefits and understanding how each works will ensure that your real estate investments are handled appropriately. Take some time to do your research and determine which type of tenancy best meets your specific needs.