Articles and FAQ's/Real Estate Articles and FAQ's/Tenancy Articles and FAQ's
Articles and FAQ's describing the primary forms of real estate ownership, including sole and separate ownership, ownership by two or more persons, ownership of condominiums and other multi-family residential units, and ownership of real estate by corporations.
Concurrent Tenancies: Tenancy in Common and Joint Tenancy
Why Do Tenancies Matter?
It is extremely important to know what your rights are as an owner of real
estate, especially if property you own is co-owned with others. The manner in
which the title to real estate is vested is in many cases arguably more
important than the ownership itself. All owners of real property should be
aware not only of their rights, but also the responsibilities, limitations, and
liabilities that come with ownership. The need to be aware of these issues
increases as the type of interest one holds in real estate becomes more complex
- as when property is owned simultaneously by more than one person. This
discussion begins with a quick refresher on the subject of tenancies before
going into more detail about the two main ways that legal interest in
non-marital property can be held by more than one person: tenancy in common and
What Is a Tenancy?
The terms "tenancy" or "tenancies" refer to the different ways of holding or
taking title to real estate. In some cases, the terms tenancy or tenancies
refer to the type of interest in real property held by one who leases that
property, as in "tenancy for years" (see Issue 20). In others, "tenancies"
refers to ownership of real property vested in one or more persons. Real
property may be owned by one person, known as tenancy in severalty (see Issue
32), or it may be simultaneously owned by more than one person, which is called
a concurrent tenancy. The primary types of concurrent tenancies are joint
tenancy, tenancy in common, community property, and tenancy by the entirety.
Of these, only the first two exist in all states in the U.S; the latter two
have to do with the way ownership is vested in marital property. This article
will focus on joint tenancy and tenancy in common, with tenancies
reserved for married couples to be featured in a future article.
Tenancy in Common
A tenancy in common may be held by any two or more parties, although married
couples generally do not own marital property in this way. Parties to a
tenancy in common are known as concurrent owners, co-owners, or tenants in
common. In this form of real property ownership, co-owners hold a separate
undivided fractional interest, which does not have to be equally distributed
among all parties. Tenants in common may own any fractional interest, such as
one-third, one-half, or even a 99% interest. This fraction refers only to the
portion of legal interest owned by a tenant in common, not to a fractional
ownership of the physical property itself. The term "undivided" means that the
co-owned real property is not itself physically divided among the tenants in
common. All parties to a tenancy in common have an equal right to possess the
entire property, a legal concept known as "unity of possession".
Creation of a Tenancy in Common
A tenancy in common is created by a deed or other document that conveys title
to real property to all concurrent owners. The document may state that a
tenancy in common is being created, or it may simply list the names of those to
whom the property is being conveyed. If the type of tenancy is not explicitly
stated on the deed to property that is being conveyed to more than one person,
it is generally presumed to be a tenancy in common. One exception is title to
real property acquired by a married couple - if no tenancy is specified, then
the type of ownership depends on state law. Some states assume the property to
be community property, while others assume a tenancy by the entirety or joint
tenancy. When creating a tenancy in common, it is not necessary to state on
the deed the fraction of property interest owned by each party. However, if no
fractional interest is specified, it is usually assumed that each tenant in
common holds an equal interest (four tenants in common = 25% each, 10 tenants
in common = 10% each, and so on).
Termination of a Tenancy in Common
The fractional ownership interest held by a tenant in common is considered sole
and separate property and may be freely conveyed with or without the permission
of the co-owners. Like any such interest, it may be sold, given away, or
willed to another. A tenant in common can only transfer the interest he holds,
not ownership of the entire piece of real property.
Joint tenancy may be held by any two or more parties, including married
couples. These parties are known as co-owners or joint tenants. Like a
tenancy in common, the interest held by each joint tenant is undivided.
However, joint tenants own equal rather than fractional shares of the tenancy.
Joint tenancies usually include the right of survivorship (ROS), which means
that upon the death of one concurrent owner, the interest held by that party
passes to the remaining co-owners. This passage of legal interest is
automatic, and is unaffected by the contents of a will or the existence of
heirs. When all other joint tenants are deceased, the last surviving co-owner
takes title in severalty, meaning that she is now the sole owner of the
property. At this point, the sole owner, like any owner of property in
severalty, has the right to will the property to her heirs or to dispose of it
in any other legal way.
Creation of a Joint Tenancy
Historically, a joint tenancy always included the right of survivorship.
However, some states now recognize this right only if it is expressly stated in
the deed or other document used to create the joint tenancy. The deed or other
document must also contain phrases identifying the joint tenancy and joint
tenants as such; this type of mutual ownership cannot be implied. If the deed
does not state that a joint tenancy is being created and who the joint tenants
are, then the joint tenancy does not legally exist. Since the intent to create
a joint tenancy must be explicitly stated, it follows that this form of
ownership cannot be created automatically by operation of law, such as a court
order, judgment, or intestate succession.
The "Four Unities"
A distinguishing characteristic of a joint tenancy is that in order for it to
be legally created, the "Four Unities" must exist. These requirements describe
the legal concept of simultaneously uniting the interests of all co-owners into
a single tenancy. The first unity is "Time" - all joint tenants must acquire
title at the same time. The second unity is "Title" - all joint tenants must
acquire title by the same document, and the document must list all joint
tenants' names. The third unity is "Interest" - all joint tenants hold an
equal, undivided interest in the property. The fourth unity is "Possession" -
all joint tenants have an equal and undivided right to possess and use the
property. All four unities are satisfied if the joint tenancy is created by a
single document (or group of documents) conveying equal interest and undivided
possession to all joint tenants, and this document or group of documents is
signed and delivered at one time.
Termination of a Joint Tenancy
A person who owns real property as a joint tenant has the right to convey that
property to another. However, such an act violates the unities of joint
tenancy, specifically those of time and title. Therefore, the new owner cannot
be a joint tenant; he holds his interest as a tenant in common with the
remaining co-owners. For example, Bob holds interest in a rental home as joint
tenants with Amy and Sally. Bob sells his interest to Steve. Steve now owns a
one-third share in the property as a tenant in common with Amy and Sally, who
remain joint tenants with each other, with each owning an undivided share of
the remaining two-thirds interest in the home. If Bob sold only half his
interest to Steve instead of the whole thing, the ownership interests would be
distributed thusly: Steve would own a one-sixth share as tenants in common with
Bob, Amy, and Sally, who would own the remaining five-sixths interest in the
property as joint tenants with each other. In either example, Steve's interest
as a tenant in common may be conveyed to another party, who would also be a
tenant in common with the remaining owners.
If a party to a joint tenancy wishes to terminate her interest in the property,
but the other parties do not agree, then a court of law must determine how to
equitably split the property between co-owners, usually through an action known
as a "partition suit". The court will generally try to physically partition or
divide the property, giving each co-owner an equal portion. Many times,
however, this is not possible without diminishing or destroying the property's
value. In such cases, the court can order the property sold, with the proceeds
evenly distributed among the joint tenants.
Summing It Up
Both tenancies in common and joint tenancies are forms of real estate ownership
by more than one person. To create a joint tenancy, the intent to do so must
be explicitly stated, and the four unities must exist. This is not necessary
for a tenancy in common to be created; in fact, failure to specify the type of
concurrent ownership on a deed generally results in a presumed tenancy in
common. Possession is the only unity necessary for a tenancy in common.
Tenants in common hold an undivided fractional interest in the co-owned
property, while the interest held by joint tenants is undivided and equal.
Shares in a tenancy in common may be freely conveyed without changing the
relationship among tenants. Such an act effectively terminates the original
tenancy in common and creates another. In contrast, the recipient of a share
of a joint tenancy becomes a tenant in common with the remaining co-owners,
because the four unities of the original joint tenancy no longer exist. If a
joint tenant wishes to terminate the tenancy but the other parties do not
agree, a partition suit may be necessary to equitably split the property or the
proceeds from its sale.
A joint tenancy is much different than a tenancy in common and both can be
quite complicated, in part because they involve combining one interest in real
property with the interests of others. Consultation with an attorney to create
co-ownership of real property is always advised. Doing so is a proactive step
toward protecting your rights, as well as ensuring that you understand the
nature of the obligations, liabilities, and relationships inherent in a
A tenancy is best defined as the type of real estate ownership one has, or the
way the interest in the property is held or vested. Title to real property is sometimes held by one natural person or legal entity; this form of ownership is called "tenancy in severalty". It may seem counter-intuitive to refer to sole ownership using the word "several", but here it is used in a legal sense, and means that the interest in the property is severed or separate from other interests. A "natural person" means a real, live human being, as distinguished
from a legal entity (an "artificial person") such as a corporation. A legal
entity is considered one person and is legally permitted to own property in
severalty, even though ownership decisions may be made by a group of people, such as a board of directors.
In legal terms, a "single" person is one that has never been married, while an "unmarried" person is one who has been married but is no longer. Tenancy in severalty by single or unmarried persons is straightforward: the holder has all the rights of ownership, and has sole discretion over the use, enjoyment, possession, and disposition (sale or other transfer) of the property. When property is owned in severalty by married persons, however, the question of how ownership is vested becomes more complicated. This is due to the fact that different states have different laws governing the ownership of property by married couples. Some states have "community property" rights, meaning that property acquired after the marriage belongs to both husband and wife equally, with each having a 50% interest. Other states use "tenancy by the entirety", in
which both husband and wife own an equal, undivided interest in any property acquired after the marriage began.
Whatever type of joint ownership by husband and wife is in effect, certain
general rules apply. First, any property owned in severalty by either spouse prior to the marriage remains the sole and separate property of that spouse. Second, any property that was willed to a spouse either prior to or during the marriage is also considered to be owned in severalty by that spouse. Likewise, any property received as a gift by a spouse prior to or during the marriage
remains the sole and separate property of that spouse. Next, any court award or
judgment received individually by either spouse during the marriage is owned in severalty by that spouse. Finally, any income earned from property held in severalty by either spouse belongs solely to the spouse who owns that property.
An interesting point with regard to tenancies by the entirety is that even
though one spouse may own property in severalty and therefore has sole
discretion over its disposition, the signatures of both spouses may be required
in order to convey that property to another person. This is due to the very
nature of this type of ownership, which is intended to provide a continued
means of support for the surviving spouse. A tenancy by the entirety creates a
legal life estate that supersedes other legal interests in the property, even
in property held in severalty. This means that the surviving spouse, upon the
death of the other spouse, may in fact claim at least partial ownership of
property that was held in severalty by the deceased spouse. This situation does
not occur in community property states, although one spouse may have the other
sign a "disclaimer deed", which disavows spousal interest in property held in severalty.
Of course, marriage to many is about sharing and equal partnership, so one
spouse may wish to convert sole and separate property to marital property owned by both. This is relatively easy in community property states, where it is legal for one spouse to deed property owned in severalty to both spouses. In states that practice tenancy by the entirety, it is slightly more complex. In many of these states, it is illegal for one to deed property to oneself, so a
"straw party" is necessary. This party, which may be an acquaintance of the
married couple but is more often a professional (attorney) or entity (title
company) that provides the service for a fee, accepts the transferred property
then deeds it back to both spouses, thus converting sole and separate property
into marital property owned by both spouses. In an upcoming issue, we will
discuss in more detail the creation and termination of property held jointly by
two or more parties, including marital property.