Tenancy is a crucial aspect of real estate ownership that is often overlooked, but it can have significant implications on the property’s ownership. There are two primary types of tenancy: tenants in common and joint tenants.
When owning a property as tenants in common, all co-owners are equal partners. In contrast, joint tenants own the property as one unit. This distinction is essential because it can affect what happens to the property if one of the owners passes away.
If someone passes away as tenants in common, their ownership is passed onto their heirs, such as their spouse and/or children. This approach is common among business partners, second marriages, and partners with separate finances. The surviving owner(s) become co-owners with the heirs of the deceased, and everyone must sign off on future transactions.
In contrast, if one of the owners passes away as joint tenants, that person’s ownership is transferred to the remaining owners. This approach is typically used by married couples or partners with joint finances. If one owner, such as a spouse, passes away, the remaining spouse would become the sole owner.
Choosing the right type of tenancy for your situation is crucial, and it’s essential to discuss with your co owner(s) what is the best decision for your situation. By doing so, you can avoid potential disputes in the future.