All this is familiar to you; there is no single direct way of owning property. Investing in real estate, you will typically hold a property in an LLC as a business. However, it is not impossible that once in a while, you might be faced with a situation whereby you either receive or purchase a property that falls under this tenancy in common, that is a different ball game.
A tenancy in a common deed means having several estates in a single estate with different shares from other people. In this article, we will discuss more about this form of property ownership, its benefits and limitations, and how it compares to other forms of co-ownership. You also learn about legal aspects concerning this form of ownership structure and the taxes that may be associated with it. In this article you will find general information on tenancy in common that will come in handy if you are an investor, a landlord, or just interested in this type of tenancy.
What Is Tenancy in Common?
Tenancy in common is the term where two or more individuals own different interests of ownership of a single property. It indicates that the co-owners will not become heir of equal parts of the property and the shares are of varied portions. For instance, if three parties are buying a property as tenants in common, one individual would own 50% of the property while the rest of the two would own 25% each. Every individual will determine their percentage of ownership with the contribution of the purchase cost by reaching an agreement among the co-owners.
Benefits of Tenancy in Common
That is why tenancy in common is considered to be one of the most favorable variants of shared property ownership. Here are some of the advantages:
Adaptable Ownership Stakes
Tenancy in common is, however, favorable in that it is flexible when it comes to the division of ownership shares. Each co-tenant may own different shares in the property as an individual, which implies that all the partners can invest to their capacity or as per their goal.
Simple Sale or Transfer of Portions
Tenancy in common also facilitates the selling or transferring of the share of the property owned. Contrary to other forms of common homeownership, you are not required to have the okay of the other owners to engage in this. It has complete freedom in the management of the ownership share, as you may prefer.
Intestate goes a step further in a tenancy in common, and your portion of the property can go to your heirs after you are gone. It does not pass on to the surviving owners, but it can be left to anybody following the procedures of will or to the legal heirs under the law of estates.
Different Ways to Own Property
There are other ways that people can share ownership of a property, such as:
Tenancy in Severalty
This is when only one individual or one business entity is capable of establishing a property all by themself. They control it fully, whereas they do not have the issues arising from cases where the property is jointly owned. This is the basic type of tenure as to property.
Joint Tenancy
In the joint tenancy, the co-owners have an equal interest in the property and have the advantage of the right of survivorship. This can mean, for instance, that if one of the joint tenants dies, then the share will automatically go to the other remainingjoint tenant. Thus, all the co-owners have to purchase their shares simultaneously with the help of the same deed or title. Joint tenancy is suitable for married people or members of the same family. For example, if one of the owners dies, the property does not Go through the Probate. However, no owner can sell or transfer his/her share in the partnership without the consent of the other partners.
Tenancy by Entirety
This kind of property holding is categorically offered to married people in certain states, and it has a similarity with joint tenancy with some distinctions. Namely, it shields the assets from the creditors who want to attach the property given that it was acquired by one of the spouses while incurring a particular debt. Characteristics of owning the property as a single legal entity also state that creditors cannot demand the sale of the property to cover an individual’s debt. Also, where one spouse wishes to sell or transfer his/her interest, the other’s consent is mandatory, which ensures that both partners make the decisions.
Conclusion
Tenancy in common is another method of owning property since the parties can decide on the proportion that they want to have and also on the manner of transferring the share. That said, it is not easy to be in this arrangement since there are many things one needs to consider. In all such arrangements, establish an understanding of the arrangements and keep the lines of communication open. Knowing the rights and the roles of both a patient and a doctor may provide the foundation to have a positive experience.
