Joint Tenancy vs Tenancy In Common. Which One To Choose When Buying Property?

When buying property together with someone, there are two different methods of holding, either by joint tenancy or tenancy in common. It is important to fully understand what each of these two methods of holding means, and the pros and cons of each.

What is Joint Tenancy?

A joint tenancy occurs when two or more people hold title to real estate jointly, with equal interest and rights to enjoy the property, regardless of how much each one contributes. The property is automatically transferred to the co-owners upon death without a need for probate.

What are Tenants in Common?

In contrast to joint tenancy, for tenancy in common, each co-owner holds a distinct and separate share in the property. This may be equal (50-50), or unequal. If one owner dies, their interest in the property is distributed based on their estate plan and does not automatically transfer to the other owners of the property.

Tenancy in common can be beneficial for people who want to control the percentage of interest each party has in a property. It is mostly used by people who are making a joint investment in a property. It also make it easier to decouple.

Choosing the Right Type of Ownership

The type of ownership you choose for your property purchase depends on your intentions for buying the property, as well as who you are making the purchase with and what your relationship with them is like. If you are buying for own stay, joint tenancy will be the common method of holding. However, if you are buying as an investment, or you and your co-owners have different beneficiary, you may consider holding the property by tenancy-in-common.

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