Tenancy in common, often abbreviated as “TIC,” is a form of co-ownership where two or more individuals hold an undivided interest in a property. Unlike other forms of joint ownership, such as joint tenancy, tenants in common don’t have the right of survivorship. This means that when one tenant in common passes away, their share doesn’t automatically transfer to the other co-owners. Instead, it becomes part of their estate and can be inherited by their heirs. In addition, with a tenancy in common, the person’s ownership rights in the property can be freely transferred while the owner is alive or through a will after the owner’s death.
Tenancy in common offers a flexible way for individuals to co-own property while maintaining their individual interests. Here’s how it works:
When two or more people decide to purchase a property together, they become tenants in common. Each tenant holds a portion of the property’s ownership.
Unlike joint tenancy, where ownership shares are usually equal, tenants in common can have different ownership percentages. This can reflect the amount of investment each party has made.
Each tenant in common has the right to possess all portions of the property, regardless of their ownership percentage. This is known as the right of possession. No tenant in common has the right to exclusive possession of any part of the property. A tenant in common who is out of possession of the property cannot bring a possessory action unless there has been an “ouster” by the co-tenant who is in possession. A claim of right to exclusive possession can constitute an ouster.
Tenants in common share the income generated from the property based on their ownership percentage. Similarly, they also contribute to property-related expenses proportionally.
Tenants in common can freely sell, gift, or transfer their ownership share without the consent of other co-owners. This can sometimes lead to new co-owners entering the arrangement.
In the event of a tenant’s death, their share is not automatically passed on to the other tenants. Instead, it becomes part of their estate and follows their will or inheritance laws.
A tenant in common can legally place a mortgage on their percentage of the land but may not encumber the other co-tenant’s interest. If the co-tenant does not pay the mortgage, the bank can foreclose, but only on the mortgaging co-tenant’s interest.
An “ouster” in the context of a tenancy in common refers to the wrongful exclusion, removal, or exclusion of one co-tenant by another co-tenant from the shared property they both own. In a tenancy in common, multiple individuals have ownership rights to a property, typically with each owning a specific percentage or share. An ouster occurs when one co-tenant prevents another from accessing or using their rightful portion of the property. For example, if two individuals are co-tenants in a property and one starts denying the other access to their portion of the property, changes the locks, or takes actions that prevent the other co-tenant from using the property, it can be considered an ouster. This act is unlawful because each co-tenant has a legal right to access and use the property as agreed upon in the tenancy in common arrangement.
The remedy of partition is a legal concept that allows co-tenants to address conflicts or disputes related to the ownership and use of the property. When co-tenants cannot agree on the property’s use, management, or disposition, any co-tenant can seek a partition action. Partition involves dividing the property into separate portions or, in some cases, selling the property and distributing the proceeds among the co-tenants according to their ownership shares. There are two main types of partition:
In this type of partition, the property is physically divided into distinct portions, with each co-tenant receiving a portion corresponding to their ownership share. However, physical partition is not always feasible, especially with certain properties like single-family homes or commercial buildings, where dividing the property could render it unusable or significantly reduce its value.
When physical partition is not possible or practical, a court may order the sale of the entire property. The proceeds from the sale are then divided among the co-tenants according to their ownership shares. This option is commonly chosen when the property is indivisible or when co-tenants cannot agree on a fair way to divide the property. It’s important to note that seeking a partition action is often considered a last resort, as it involves legal proceedings, potential costs, and the dissolution of the co-ownership arrangement. Before pursuing a partition action, co-tenants might consider alternatives, such as negotiating a buyout, reaching an agreement on property use, or finding ways to resolve disputes outside of court.
In the context of tenancy in common ownership, various financial aspects require careful consideration and agreement among co-owners. Here’s a breakdown of how repairs, improvements, taxes, and mortgages are typically managed within this form of property ownership.
Co-owners of a property under a tenancy in common arrangement typically share the responsibility for repairs and maintenance in accordance with their ownership shares. While minor repairs may be managed individually, major repairs affecting the property’s structural integrity or value might necessitate unanimous agreement or a proportional financial commitment from each owner.
Decisions regarding property improvements and alterations can vary depending on the tenancy in the common agreement. Generally, significant improvements that influence the property’s value or affect other owners’ rights may require consensus among all co-owners. Clear communication and agreed-upon guidelines are crucial in ensuring harmonious decision-making in this regard.
Property tax obligations are usually distributed proportionally among the co-owners based on their ownership shares. Each co-owner receives a separate tax assessment, and it becomes their responsibility to ensure timely payment of their designated portion. Clarity in understanding the tax distribution mechanism is essential to prevent misunderstandings and ensure compliance.
In a tenancy in common, individual co-owners can hold separate mortgages or financing arrangements for their respective ownership interests. If one co-owner defaults on their mortgage, it generally does not impact the ownership shares of others unless specific mortgage terms stipulate otherwise. Open communication about mortgage arrangements is recommended to avoid potential complications.
To navigate these financial aspects effectively, co-owners often draft formal agreements that outline how decisions are made, costs are shared, and disputes are resolved. These agreements can help prevent conflicts and provide a clear framework for managing the property collaboratively. In case disputes do arise, mediation or legal recourse might be necessary, depending on the terms of the agreement and the severity of the disagreement.
If one co-owner breaches their duty of fair dealing and interferes with the rights of the others, the affected co-owners may have legal recourse to enforce their rights and seek remedies.
These remedies could include seeking an injunction to prevent further interference or even a partition action, which could lead to the sale of the property and division of the proceeds among the co-owners.
Tenancy in common allows for unequal ownership shares and doesn’t include the right of survivorship, unlike joint tenancy.
Yes, you can. However, if the other co-owners don’t agree, you might need to file a partition lawsuit to force a sale.
Property taxes are divided among co-owners based on their ownership percentages.
A tenant’s bankruptcy shouldn’t directly affect other co-owners. However, their share might be subject to creditors’ claims.
Yes, in most cases, you can convert your ownership arrangement. Consult legal experts to understand the process in your jurisdiction.
Absolutely. You have the freedom to designate any beneficiary for your share, whether they’re a family member, friend, or business partner.
Tim McDuffey is a practicing attorney in the State of Missouri. Tim is a licensed member of the Missouri Bar and Missouri Bar Association.
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