Tenants in Common Ownership Agreement: What It Is and How It Works

When two or more people purchase a property together, they have to decide on how they want to own the property. One way to do this is through a tenants in common ownership agreement. This type of agreement allows for each owner to own a specific share of the property, with each share being divided equally or unequally among the owners.

Here are some key things to know about a tenants in common ownership agreement:

Ownership Shares: Each owner has a designated percentage of ownership in the property, which can be determined by contribution amount, need, or any other agreed-upon method. Unlike in joint tenancy, tenants in common ownership agreement allows for unequal ownership percentages.

Rights and Responsibilities: Each tenant in common has the right to use and occupy the entire property, but only to the extent of their ownership percentage. This means that if there are three tenants in common with equal ownership percentages, each would have the right to use one-third of the property. However, tenants in common do have the responsibility to maintain and repair their own separate areas, as well as contribute to common areas if necessary.

Income and Expenses: The income and expenses from the property are divided according to the ownership percentage of each tenant in common. For instance, if one tenant in common owns 50 percent of the property, they will receive 50 percent of the rental income and will be responsible for 50 percent of the expenses.

Ownership Transfer: Tenants in common ownership agreement allows for ownership transfer, so if one tenant in common wants to sell their share, they are free to do so. However, the new owner will become a tenant in common with the remaining owners, and their ownership percentage will be determined by the agreement.

Survivorship: Unlike in joint tenancy, tenants in common ownership agreement does not include a right of survivorship. This means that if one tenant in common dies, their share of the property will pass on to their heirs or beneficiaries according to their estate plans.

Overall, a tenants in common ownership agreement provides flexibility and control over each owner`s share of the property. However, it`s important to have a written agreement in place to ensure that everyone is on the same page and to avoid any potential conflicts down the line. Consult with a real estate attorney to understand the legal implications of this agreement and make an informed decision.

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