When it comes to owning property, you may not always be alone. There are instances where multiple people share ownership of a piece of property, and this is called a concurrent estate. Whether it’s a family home, a vacation property, or even an investment property, co-owning a property comes with unique responsibilities and benefits.
In this guide, we will explore what concurrent estates are, the different types of co-ownership, the rights and obligations of co-owners, and the common disputes that may arise. By the end, you’ll have a clear understanding of concurrent estates and how to navigate co-owning property with others.
What Are Concurrent Estates?
A concurrent estate refers to a situation where two or more people share ownership of the same property. In simpler terms, it means that more than one person holds an interest in the same piece of real estate at the same time. There are several forms of concurrent estates, but the most common are:
- Joint Tenancy
- Tenancy in Common
- Tenancy by the Entirety (available only for married couples in some states)
These three types of concurrent estates each come with their own rules and benefits. Understanding the differences between them will help you choose the best arrangement for your situation.
Joint Tenancy: The Right of Survivorship
In a joint tenancy, two or more individuals own a property together, each with an equal share. The key feature of joint tenancy is the right of survivorship, meaning that when one co-owner dies, their share of the property automatically passes to the remaining co-owners. This process happens without the need for probate, which can be a costly and time-consuming legal process.
Creating a Joint Tenancy
For a joint tenancy to be valid, there are four essential requirements called the four unities:
- Unity of Time: All co-owners must acquire the property at the same time.
- Unity of Title: All co-owners must receive the property title through the same deed.
- Unity of Interest: All co-owners must hold equal interest in the property.
- Unity of Possession: All co-owners must have the right to possess the entire property.
If any of these unities are missing, the property is not considered joint tenancy and may default to another form of ownership, such as tenancy in common.
Pros and Cons of Joint Tenancy
Pros
- Right of Survivorship: If one co-owner dies, their share automatically passes to the surviving co-owners.
- Avoids Probate: Since the property does not go through probate, the process of transferring the property to the surviving co-owners is quicker and simpler.
- Equal Use and Possession: All co-owners have equal rights to use and possess the entire property, even if they only own a fraction of it.
Cons
- Severance Risk: If one co-owner transfers or sells their share to someone else, it can terminate the joint tenancy, turning it into a tenancy in common, and the new owner will not have the right of survivorship.
- No Flexibility in Ownership: All co-owners must have equal shares in the property, and they cannot divide ownership unevenly.
How Can Joint Tenancy Be Terminated?
A joint tenancy can be terminated if one of the four unities is broken. For example, if one co-owner sells or transfers their share of the property to someone else, the property no longer has the same unity of title, and the joint tenancy is broken. The new owner will become a tenant in common with the remaining co-owners.
If you’re a joint tenant, it’s important to understand that selling your share or transferring it to someone else can drastically change the ownership structure, potentially causing you to lose your privileges as a joint tenant.
Tenancy in Common: Shared Ownership Without Right of Survivorship
In a tenancy in common, multiple co-owners share ownership of a property, but unlike joint tenancy, there is no right of survivorship. This means that when one co-owner passes away, their share of the property does not automatically pass to the remaining co-owners. Instead, the share passes to the deceased co-owner’s heirs or beneficiaries, either according to their will or through state inheritance laws.
Creating a Tenancy in Common
A tenancy in common can be created simply by having multiple people named as co-owners on the title of the property. Unlike joint tenancy, tenants in common can own unequal shares of the property. For example, one person may own 50% of the property, while the other co-owners own 25% each.
Pros and Cons of Tenancy in Common
Pros:
- Unequal Shares: Co-owners can have unequal shares in the property, allowing for more flexibility in ownership.
- Freedom to Transfer Ownership: Each co-owner can sell, transfer, or mortgage their share of the property without the consent of the other co-owners.
Cons:
- No Right of Survivorship: The deceased’s share goes to their heirs, not the other co-owners, which may lead to potential disputes among heirs or future owners.
- Risk of Disputes: Because co-owners can have different shares and different interests in the property, disagreements may arise over how the property is used or managed.
How Can Tenancy in Common Be Terminated?
A tenancy in common can be terminated by partitioning the property. This means dividing the property into separate units if possible. If the land cannot be divided, the court may order the property to be sold, and the proceeds will be distributed among the co-owners based on their ownership shares.
Partition actions can also happen if co-owners disagree on the management or sale of the property. In such cases, one co-owner may petition the court to divide the property, and the court will determine how it should be handled.
Tenancy by the Entirety: A Special Form of Joint Tenancy for Married Couples
A tenancy by the entirety is a special form of joint tenancy that only applies to married couples. In this type of concurrent estate, both spouses are treated as a single legal entity when it comes to property ownership. If one spouse dies, the surviving spouse automatically inherits the property.
Creating a Tenancy by the Entirety
To create a tenancy by the entirety, the couple must be married and meet the following criteria:
- Marriage: The property must be held by a married couple.
- Simultaneous Ownership: Both spouses must acquire the property at the same time.
- Equal Shares: Both spouses must have equal shares in the property.
- Right of Survivorship: Like joint tenancy, there is a right of survivorship in a tenancy by the entirety.
Pros and Cons of Tenancy by the Entirety
Pros:
- Right of Survivorship: If one spouse dies, the surviving spouse automatically inherits the property, avoiding probate.
- Protection from Creditors: In some states, property held in tenancy by the entirety is protected from the creditors of just one spouse, making it a form of asset protection.
Cons:
- Limited to Married Couples: Only married couples can create a tenancy by the entirety, which limits its use.
- No Individual Control: Both spouses must agree before selling or transferring the property, limiting individual control.
Rights and Obligations of Co-Owners in Concurrent Estates
Co-owners in concurrent estates have certain rights and responsibilities. Understanding these rights can help avoid conflicts and ensure smooth property management.
Rights of Co-Owners
- Right to Possession: Each co-owner has the right to possess the entire property, even if they own only a fraction of it.
- Right to Use: Co-owners have the right to use the property as they see fit, subject to any agreements made among them.
- Right to Income: Co-owners are entitled to their share of any income the property generates, such as rental income or profits from farming.
Obligations of Co-Owners
- Contributing to Costs: Co-owners must contribute to the costs of maintaining the property, including mortgage payments, taxes, insurance, and repairs.
- Sharing Responsibilities: Co-owners must work together to manage the property. If one owner is not paying their share, the others may need to cover the costs, or legal action may be taken.
- Handling Disputes: It’s important to communicate and agree on major decisions related to the property. Disputes can arise over how the property should be used, who should pay for repairs, and how profits should be shared.
Common Disputes Among Concurrent Property Owners
Owning property with others can sometimes lead to disagreements. Common disputes among co-owners include:
- Disagreements over Property Management: Differences in how the property should be maintained, used, or rented.
- Partition Disputes: Disputes over whether the property should be sold or physically divided.
- Share Disputes: Co-owners may disagree over the division of profits or how expenses are shared.
To avoid disputes, it’s a good idea to create a written agreement that outlines how decisions will be made, how costs will be shared, and what happens if one co-owner wants to sell their share.
Conclusion
Owning property with others can be a rewarding experience, but it also requires understanding and cooperation. Whether you are in a joint tenancy, tenancy in common, or tenancy by the entirety, each concurrent estate comes with its own unique set of rules and benefits.
By understanding the different types of concurrent estates, the rights and obligations of co-owners, and how to handle disputes, you can ensure that your co-ownership experience is positive and productive. Always consider consulting with a property lawyer if you have questions or need assistance with co-owning property to ensure your rights are protected and your interests are upheld.