While factors like closing dates, inspections, and subjects are commonly considered when buying a home, many buyers do not consider their options for ownership before signing the final purchase agreement. As experts in real estate and conveyancing, the team at Sidhu & Associates knows that the type of ownership you choose can have a lasting effect on estate distribution and selling the property. That is why we have provided some information comparing joint tenancy vs. tenancy-in-common to help you understand what each option entails and determine which type of ownership is right for you.
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What are the Differences Between Joint Tenancy and Tenancy-in-Common?
While joint tenancy and tenancy-in-common are both classified as a type of homeownership, they differ in several ways.
Joint Tenancy
With joint tenancy, two or more people own property in equal undivided portions with an equal right to use the entire property. When purchasing a property with someone else, most buyers will choose to take the title as joint tenants. If one joint tenant passes away, the property is transferred to the surviving joint tenant upon death and does not become part of their estate. This means that it will not be subject to probate fees, will not be taxed as a part of the estate, and will not be distributed among the beneficiaries of the estate.
If the deceased owner is the only name on the title, the home must be probated along with other assets of the estate, significantly increasing the fees that must be paid before the proceeds of the estate can be distributed to the beneficiaries. That is why individuals who own a home in their name alone often add a family member to the title as a joint tenant.
Tenancy-in-Common
Tenancy-in-common is a form of ownership where multiple people own separate shares of the property, and the shares can be dealt with separately. For example, four individuals may each own 25% of a cottage property or a home, or one person may own 40% while the other three own 20% each. The division of ownership is fully determined by those on the title, and no party is entitled to another person’s share upon that person’s death.
Tenancy-in-common allows each owner to pass on their share in the property to beneficiaries under their will if they choose to do so. For example, if two couples purchased a cottage property together—with each person owning a 25% stake in the property—each couple could independently pass on a 50% share in the property to their children should they choose to do so.
To learn more about types of homeownership or to inquire about our real estate and conveyancing services, get in touch with the team at Sidhu & Associates. We can be reached through our online contact form and will be happy to answer any questions you may have.
