Tenancy in Common

What is Tenancy in Common?

Tenancy in common (TIC) is a form of property ownership where two or more individuals hold shares in a property. Unlike joint tenancy, where all owners have equal shares, tenancy in common allows owners to have unequal ownership interests, and each owner has the right to sell, transfer, or will their share to another party. This type of ownership is common among people who inherit property or buy property together but want individual control over their portion.

How Does Tenancy in Common Work? 

Tenancy in common allows co-owners to own specific shares of a property, either equal or unequal. Here’s how it generally functions:

Ownership Shares:

Each co-owner can own a different percentage of the property. For example, one person may own 70%, while another owns 30%. These shares are not tied to any specific part of the property; rather, all owners have rights to the entire property.

Transfer of Ownership:

Each owner can transfer their share to others at any time, either through sale, gift, or inheritance, without needing the approval of the other co-owners. When an owner passes away, their share is passed on according to their will or estate plan, not automatically to the other owners.

Responsibility for Property:

All co-owners share the responsibility for property-related costs like taxes, maintenance, and mortgage payments in proportion to their ownership share.

No Right of Survivorship:

Unlike joint tenancy, tenancy in common does not include the "right of survivorship," meaning when one co-owner dies, their share goes to their heirs, not automatically to the surviving co-owners.

Why is Tenancy in Common Important? 

Tenancy in common is a flexible ownership structure that offers several advantages:

• Customizable Ownership Shares: Co-owners can own unequal portions of the property, which is useful when one person contributes more to the purchase.
• Transferability: Owners can freely transfer their share without needing consent from other co-owners, offering flexibility if an owner wants to sell their portion.
• Inheritance Flexibility: Because there is no right of survivorship, each owner can decide who inherits their share of the property, allowing more control over estate planning.

Example of Tenancy in Common in Action Three siblings inherit a family vacation home as tenants in common. One sibling owns 50% of the property, while the other two own 25% each. Each sibling has the right to use the entire property, but their ownership responsibilities (e.g., maintenance costs) are divided according to their ownership shares. One sibling can sell their share or leave it to an heir without affecting the ownership of the others.

Pros and Cons of Tenancy in Common

Pros:

• Flexible Ownership Structure: Owners can have unequal shares based on their contributions or agreements.
• Transferable Shares: Each owner can sell or will their share independently of the others.
• Control Over Inheritance: Property shares can be passed to heirs or beneficiaries, rather than automatically to the co-owners.

Cons:

• Potential for Disagreements: Since co-owners can sell or transfer their shares without approval, this can lead to disputes or co-ownership with people you may not know.
• Shared Responsibilities: All owners are responsible for expenses, and disagreements about financial contributions or maintenance can arise.
• No Automatic Inheritance for Co-Owners: If one owner dies, their share may go to heirs or beneficiaries, which could complicate ownership for the remaining co-owners.

Conclusion: Tenancy in common is a versatile property ownership structure that provides flexibility in ownership and transferability. However, it requires clear communication and agreement among co-owners to avoid potential conflicts.

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