Joint Tenancy vs. Tenants in Common: What's the Difference?
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Jenn Morson

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There are several methods to own residential or commercial property with another individual. Two ways to hold title together are joint occupancy and occupancy in common arrangement. These forms of real residential or commercial property ownership agreements each have benefits and downsides depending upon your individual needs and situations.

People may pick a joint tenancy or occupancy in typical arrangement when they are a married or cohabitating couple, relative, service partners, financial investment partners, or even roomies picking to own residential or commercial property together. Whatever your reason, learning the benefits and drawbacks of a joint tenancy vs. occupancy in typical agreement will help direct you through the residential or commercial property ownership process.

Note that while the term "occupancy" is utilized in rental situations, in this context it describes ownership interest in a residential or commercial property. The owners in these arrangements would be referred to as joint occupants or tenants in common and are not tenants.

What is joint tenancy?

When two or more individuals buy a residential or commercial property together with equal interest in the residential or commercial property and equivalent rights, this is described as joint occupancy. Perhaps the most common type of joint occupancy ownership is that of a couple.

In order to be considered joint tenancy, four conditions need to be met:

- The tenants must get the residential or commercial property at the exact same time

• Equal residential or commercial property interest by each tenant
• All occupants should obtain the title deed from the very same file
• Equal rights of ownership should be worked out by all tenants
  
  According to Gagan Saini, the director of acquisitions of JiT Homebuyer, a property services and financial investment company in Metairie, Louisiana, a joint occupancy agreement requires owners to concur on any decisions about the residential or commercial property. "This includes choices such as when to offer the residential or commercial property, who is accountable for repair and maintenance, and how the benefit from the sale of the residential or commercial property are divided," Saini says.
  
  Advantages of joint occupancy
  
  When you hold title in a joint tenancy, if one of the co-owners dies, the ownership rights automatically transfer to the remaining owner or owners. For example, if Bob and Cindy are married, and Bob passes away, Cindy will automatically end up being the complete owner of the residential or commercial property. There will be no need to go to probate, and Cindy will not owe any transfer taxes. If the residential or commercial property were owned in joint occupancy by unmarried individuals, the staying owner or co-owners would also avoid the probate process, although they would require to declare the inherited residential or commercial property as a present.
  
  The automatic transfer of ownership to your co-owners, as laid out above, is described as the right of survivorship.
  
  Additionally, joint tenancy assurances equivalent rights and ownership for all parties. So if 2 individuals own the residential or commercial property, each controls 50%. If there were 5 owners, each would manage 20% interest in the residential or commercial property.
  
  Disadvantages of joint occupancy
  
  Perhaps the most significant drawback of joint tenancy relates to creditors. If one of the occupants owes a debt, a creditor has the power to terminate a joint tenancy even if the other co-owners have nothing to do with that financial obligation. If you are seeking joint tenancy with somebody who has bad credit, significant financial obligation, or is prone to liability by occupation, you will need to be familiar with these risks.
  
  If you do not long for your ownership to move immediately to the other owners and would rather it choose to go to your beneficiaries, joint occupancy is likewise not a good choice for you.
  
  Another drawback of joint tenancy is that if you and the other co-owners can not reach an arrangement on what to do with the residential or commercial property, you would require to file a lawsuit, described as a partition action. Your co-owners would be required to react to the partition action, which can be expensive and time-consuming.
  
  What is occupancy in common?
  
  If numerous people hold title under tenancy in typical, this suggests that each individual can select to offer their ownership interests in the residential or commercial property at any time. Unlike with joint tenancy, a tenancy in common agreement permits numerous owners to own various percentages of the entire residential or commercial property. Although one tenant might possibly own simply 30% of the residential or commercial property while the other owners own 35% each, this does not imply that specific areas of the residential or commercial property are owned by those holding the bigger ownership percentage. The whole residential or commercial property is available to each owner, despite portion, and that is called undistracted interest.
  
  Additionally, on the celebration of their death, each co-owner might choose who will be the beneficiary of their ownership as part of their estate.
  
  An occupancy in typical may likewise be referred to as a TIC arrangement. The acronym stands for tenancy in typical.
  
  Advantages of tenancy in typical
  
  Under a tenancy in typical title, each owner does not need to have equal shares. So theoretically, one owner might have 25% ownership while the other has 75%.
  
  This kind of joint ownership is ideal for groups of individuals aiming to share residential or commercial property or married couples who, for whatever factor, do not want their share of the residential or commercial property to transfer instantly to the enduring spouse upon their death. For example, if an individual marries a widow with children, the couple may want to collectively own residential or commercial property through tenancy in typical so that the widow can leave her share of the residential or commercial property to her kids instead of her spouse.
  
  Disadvantages of occupancy in common
  
  If you do not have a will and hold title via occupancy in common, your share of the residential or commercial property will be distributed according to your state's probate laws. Under tenancy in common, there is no right of survivorship.
  
  If you share ownership through an occupancy in typical title, your co-owners can offer their part without your say, meaning that in theory owners might discover themselves co-owning residential or commercial property with complete strangers. For instance, if three roomies hold title under occupancy in common and one of the roommates chooses to sell their part of the ownership, the staying 2 roomies have no say regarding this decision.
  
  Joint occupancy vs. tenancy in common
  
  The essential differences between these two choices for residential or commercial property ownership are:
  
  Choosing which ownership works for you
  
  When deciding whether joint tenancy or occupancy in common is more matched for your requirements, the primary step is to ensure you understand the distinctions between both of these co-ownership options. Choosing to own as occupants in common vs. joint tenancy needs understanding of both options.
  
  According to Troy Robillard of Premiere Plus Real Estate in Fort Myers, Florida, no matter your scenario, you will need to consider all the benefits and downsides of each structure along with seek advice from professionals. He states, "Whether you're a couple, service partners, or financiers, choosing the proper ownership structure needs mindful consideration of your objectives and preferences. Consulting with a lawyer or property specialist can provide invaluable assistance customized to your special scenarios, guaranteeing you make notified choices that align with your long-term plans."
  
  This short article is for educational functions. This content is not legal suggestions, it is the expression of the author and has not been assessed by LegalZoom for accuracy or changes in the law.
  
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