One of the primary differences between owning property under a title of joint tenants with right of survivorship or as tenants in common is what happens when one of the owners dies. With joint tenants, the death of one owner means that owner’s share automatically goes to the other owners. When a tenant in common dies, their share is passed to their legal heirs.
Tenants In Common Definition: Share a specified proportion of ownership rights in real property and upon the death of a tenant in common, that share is transferred to the estate of the deceased tenant. Related Terms: Joint Tenancy, Co-ownership, Tenancy By The Entireties. Tenants in Common vs. Joint Tenants. Tenants in common and joint tenants are similar concepts, as the co-owners of the property own separate interests in the property as a whole, rather than being able to claim a specific part of the property. The first difference is that tenants in common may own shares of different sizes, and may obtain their.
Tip
When a tenant in common dies, co-owners don't automatically inherit the property. The person or entity who gets their share of the property is named in their will or revocable living trust, or, if there is no will, the property passes via the state’s intestacy laws.
Understand Tenants in Common
Survivorship is just one difference between joint tenants and tenants in common. Tenants in common do not have to own equal percentages of a property, but every tenant in the title has the right to full use of the property, not just their percent interest. Tenants in common titling is often used by people purchasing investment properties, but unmarried couples buying a home together frequently decide on this designation.
Tenant in Common Beneficiaries
The tenant in common may leave their share of the property to anyone they want after death. That isn’t always a direct heir, such as a child. If the tenant doesn’t have children, they might leave their estate to a nonprofit, so the surviving tenants in common will find themselves co-owners with a charitable organization, which will almost certainly want to sell its portion as soon as possible. If the tenants in common were unmarried but a couple, the late tenant may have left her share to her partner in her will.
If the tenant in common died without a will, their share of the property goes to the next of kin, as per the state’s laws of intestate succession. Based on who that happens to be, the other tenants in common may find themselves sharing ownership with a spouse, children, the deceased person’s second cousin or some other relative.
Navigating Probate Proceedings
When the tenant’s will goes into probate court, the court appoints an executor, or personal representative, whom the tenant usually names in their will. The personal representative has the legal authority to convey the tenant’s share of the property to the named beneficiary. If the tenant died without a will, the court will appoint a personal representative, and that person will convey the tenant’s share to the next of kin. If the tenant had a living trust, their estate does not go through probate but there is a trustee named who conveys the property to the beneficiary.
TIC Death and Mortgages
What happens to the person's mortgage obligation when they die? Much depends on how the mortgage is structured. With tenants in common, each tenant might have their own mortgage for their percentage of ownership, or the mortgage may be taken out in the names of all tenants in common. With the latter, if one tenant dies, the other tenants in common are still responsible for paying his share of the mortgage or the lender may foreclose. Co-borrowers are responsible for such debts. If the deceased person had his own mortgage, this is a debt the personal representative must handle. If the person did not have other sufficient assets to pay off their mortgage, the lender will likely want to sell the person's share to get the money owed. In such a situation, the co-tenants should discuss their options with the deceased person's lender.
Surviving Tenant’s Options
The surviving tenants have a few options when one tenant in common dies. They can agree to sell the property, along with the party who has inherited the late tenant’s share. One or more of the tenants in common can buy out the beneficiary’s share, or perhaps find another person willing to become a tenant in common to buy out the deceased person’s portion. If the beneficiary wants to keep the property and become a tenant in common, which may occur with investment properties, that’s another possibility. If no one can agree, one tenant can file a partition action in court, and the court can decide the best way to separate the tenant’s shares of the property.
Tenant in Common Agreements
If the tenants in common had a strong written agreement in place about how the property is used, the transition when one dies is easier. Many such agreements allow the other tenants a right of first refusal to buy a tenant’s share or the ability to approve potential buyers. Such agreements are a good idea and require drafting by a real estate attorney.
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About the Author
A graduate of New York University, Jane Meggitt's work has appeared in dozens of publications, including PocketSense, Zack's, Financial Advisor, nj.com, LegalZoom and The Nest.
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- 4 What Happens in the Event of a Tenants in Common Death?
If you’re in the market for a house and aren’t going to buy the property by yourself, you’ll need a legal structure for the type of ownership you have. For most people, that means deciding between a tenant in common and a joint tenant arrangement. The best structure for your situation depends on your relationship to the co-owners and who you want to receive your share of the property after your death.
Understand Tenants in Common
Tenants in common are two or more individuals who each have an ownership interest in a dwelling. Such an arrangement may be created at any time. Tenants in common may own a percentage of the property, but not all tenants in common must own the same percentage. However, the entire property is shared, so one person cannot claim they own particular sections of the house. If one tenant in common wants to sell her share, a co-owner may purchase it from her, or she may sell it to a third party. A tenant also has the right to mortgage her share of the property. Tenants in common is a structure used more often by people who are not related to each other by blood or marriage.
Tenants in common must decide how to split taxes and other bills, as taxing or billing entities are not going to send separate bills to the household. The tenants may decide among themselves how these payments are split up. They may do so based on the percentage of the property each owns, or perhaps one owner serves as caretaker of the property in return for having the other tenants pay their share of certain bills.
Although it’s up to the co-owners to sort out these issues, when it comes to property taxes, each co-owner cannot deduct more than their share of the ownership of the home on federal taxes. For example, if three tenants in common each own one-third of the dwelling and the annual property taxes are $3,000, no one can claim more than $1,000 in property tax deductions on their income tax forms. There have been exceptions, however, when one owner pays the full taxes to save the property from a property tax foreclosure.
When a Tenant in Common Dies
When a tenant in common dies, he can bequeath his share of the property to anyone in his will. That means the other tenant or tenants could end up owning a house with a total stranger. Should a tenant die without a will, his share of the property must go through the probate process, and the beneficiary is the person closest to him by kinship or marital ties according to state laws of intestate succession.
How Joint Tenants Differs
Joint tenants own equal shares of a property, given to them at one time with the same deed. Both are equally responsible for the property. One joint tenant cannot sell their part of the property without the other’s consent.
In states where community property doesn't rule, married couples generally use joint tenancy provisions, but joint tenancy is not limited to those who are married. Joint tenancy in most states includes the right of survivorship. If one owner dies, their interest in the property automatically goes to the other owners, bypassing probate. The surviving tenants can do anything they want with the property from that point, whether that involves keeping it, selling it or renting it.
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About the Author
A graduate of New York University, Jane Meggitt's work has appeared in dozens of publications, including PocketSense, Zack's, Financial Advisor, nj.com, LegalZoom and The Nest.
Cite this Article