Understand the differences between Joint Tenancy and Tenants in Common

It is important for co-buyers to understand the difference between of the two tenures. Each form of ownership has legal and tax implications, especially when one owner's death or if the property is sold.

Ownership

In joint tenancy, each co-owner has an equal undivided interest in the entire property. Tenants in Common can own different percentages of the property, for example, 60/40.

Right of Survivorship

One of the key features of joint tenancy is the right of survivorship. When one joint tenant dies, their interest in the property automatically passes to the surviving joint tenant, not to the deceased person's heirs or through their will. There is no right of survivorship in tenant in common. If a co-owner in a tenant in common dies, the interest in the property will form part of he/her estate and is distributed according to their will, or if there is no will, according to the rules of intestacy.

Selling or Transferring Interest

A joint tenant can sell or transfer their interest, but doing so will break the joint tenancy, turning it into a tenant in common between the new owner and the remaining original joint tenants. Each tenant in common can sell, transfer or mortgage their interest without the consent of the others and without affecting the ownership structure.

Estate Planning

Joint tenancy often use by married couples or close family members as a means of ensuring that property passes smoothly to the surviving owner without going through probate. More flexible for estate planning, especially when owners want their share of the property to go to someone other than the co-owner.

Suitability

Joint tenant is suitable for parties who want equal shares and the property to pass directly to the surviving owner upon death. Tenant in common is suitable for investors or friends buying property together when they contribute unequal amounts or want their share to go t specific heirs.

Severance of Joint Tenancy

Joint tenancy can be severed by any joint tenant, converting it into a tenancy in common. This can be done through a sale or transfer of their interest or by a unilateral action depending on the jurisdiction. There is no severance of tenant in common since the unity of the tenancy isn't as intertwined as in joint tenancy.