The ownership of a particular property can be classified into the following two types: Joint Tenancy and Tenancy in Common. This definition is applicable to a multitude of assets but assumes special significance in case of real estate or when it is being referred to in context of ownership of a house.
During the purchase of real estate or a property by an individual or a certain group of individuals, the parties involved should be clear regarding their rights towards their home. The owners or joint owners have to decide the method in which the title of the property purchased by them is going to be taken. This becomes crucial in the case when either or some of the purchasers of the property have to move or get separated.
In the Joint Tenancy type of co-ownership, all the owners of the property are, in effect, the owners of the whole property jointly with the other owners. While the Joint tenancy is in force, none of the parties can have any specific share in the property. The earnings or the profits that accrue from the property have to be evenly distributed among all owners in an equal manner. In this type of ownership two or more owners could be involved.
In Joint tenancy the “survivorship” condition remains applicable. This effectively means that in case of death or demise of one of the joint holders of the property, the surviving co-owner/owners attain the complete ownership of the property legally. This effectively means any person who owns a piece of real estate jointly with other owners cannot create a will to leave his portion of the property to anybody other than the original joint owners. The survivorship law ensures that the rights to the property remain with the joint owners.
Joint ownership could be applicable on assets like real estate, automobiles, equity market instruments, bank accounts, expensive furniture etc.
To summarize, Joint Tenancy comes into effect when the following four conditions are met: the unity of: time (ownership at the same time), title (thorough the same title instrument), interest (equal interest in the property) and possession (right to possess the property at the same time).
The most common circumstances where Joint Tenancy is applied is in the case of a married couple where both the parties involved want to own assets jointly and want to be protected by the law of survivorship. A typical example of this type would be a house purchased and owned by a married couple.
Tenancy in common refers to that kind of ownership in which the law of survivorship is not applicable. This means that two or more individuals can jointly own a piece of property where their share may or may not be equal. However in case of death of one of the owners of the property, the share of property belonging to the deceased owner does not get automatically transferred to the surviving co-owner. In such a case, the shares belonging to the deceased owner then gets passed on the beneficiaries as per the will left behind by the deceased member.
Tenants in common usually have unequal, undivided shares in the property. The property is divided amongst the owners or co-owners as per legally binding agreements. Tenants in common each own a distinct interest in the same real estate and each has an equal ownership to the custody and use of the property.
As an example let’s consider the following, if three people hold title to the property, each would own an exclusive one-third interest. Tenancy in common would effectively enable an owner or a co-owner to hold his or her undivided interest. This would also effectively allow the owners to trade, transfer or mortgage that interest through the right of partition.
Tenancy in common is the type of ownership that can be held between two or multiple parties and the title to one piece of real estate is held jointly as per stipulations.