If you own or plan to own real property with someone else, you need to understand the similarities – and differences – between the two types of joint ownership: joint tenancy and tenancy in common.
FindLaw explains that both types of ownership give each “tenant” an undivided ownership interest in the property as a whole. In other words, you do not own some specific parts of the property while the other tenant(s) own other parts of it. Instead, all of you own the entire property together. Nevertheless, the two differ in important ways.
Joint tenancy means that you and the other owner(s) obtained equal shares of the property at the same time by means of the same deed. It also means that you have right of survivorship. When one owner dies, you and any other surviving owner each receives the decedent’s ownership share. In addition, the property automatically passes to the surviving owner(s) without needing to go through probate. Under California law, a joint tenancy owner can unilaterally convert his or her ownership interest to tenancy in common by recording a deed transferring the ownership interest from joint tenancy to tenancy in common.
Tenancy in common
Tenancy in common means that you and the other owner(s) may (but are not required to) have unequal ownership interests in the property and may have obtained these interests at different times. In addition, no right of survivorship attaches to a tenancy in common. Instead, if an owner dies, his or her ownership interest passes by will, trust agreement or laws of intestacy (dying without a will) to the owner’s heirs or trust beneficiaries. A tenancy in common can end in one of the following ways:
- You buy out the other tenant(s).
- You sell the property and distribute the proceeds among the tenants per their respective ownership shares
- You file a partition action that allows you to sell your share.
While the differences between joint tenancy and tenancy in common may seem like hair splitting, they become very important when one owner dies or wishes to sell. You consequently need to think carefully before entering into either type of joint real estate ownership.