Tenants in Common Selling Property

Written by erika johansen
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Tenants in Common Selling Property
Tenancy in common is a type of concurrent estate. (tea estate image by Kirubeshwaran from Fotolia.com)

Concurrent estates are those in which multiple owners share the right to own or possess the property. Tenancy in common is a type of concurrent estate in which the tenants own their property individually, but share the right to possess it. Tenants in common can usually sell their property, but may face restrictions. Those with specific questions about sale of tenancies in common should seek the advice of a real estate attorney.

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Common Shares

Tenants in common own individual shares of an entire piece of property. Unlike many other concurrent estates, however, tenancy-in-common interests need not be equal. Thus, for instance, one party may own 1/2 of the property, while two other parties each own 1/4. What distinguishes these ownership interests from pure ownership of similar parcels is the fact that the instrument that granted ownership to the parties explicitly stated "to be held as tenants in common." A few states will also default to a tenancy in common when anyone make a transfer of land to multiple owners.

Right to Possess

Although tenants in common own their shares of the property individually, they share the right to possess (use) the entire property with each other tenant. This sharing is known as a "unity of possession," and it distinguishes tenancy in common from outright ownership. Thus, if Frank owns 1/3 of a tenancy-in-common parcel, he may theoretically use the entire parcel to build a casino. However, he cannot interfere with the other tenants' rights to use the property, and he cannot damage the value of the other tenants' shares.

Alienation

Because each share of a tenancy in common is owned individually, tenants' shares are legally alienable (meaning, they can be sold, transferred or given away). However, unless the selling tenant acts to legally sever his portion of the estate from the whole, the buyer will still take his portion as tenant in common and share possession with the other original tenants. Therefore, many states will give the old tenants the right to approve of new tenants before sale. Because many tenancy-in-common properties are bought using group loans between the tenants, many jurisdictions also give the other tenants in the group loan a right of first refusal on the portion of the property for sale.

Partition by Sale

Sometimes tenants in common wish to get rid of the unity of possession and simply own their shares of the property in fee simple (absolute ownership). In this case, they may petition a court to partition the property. Partition effectively divides the property up in terms of possession as well as ownership. If property is more valuable as a whole than in pieces, a court may decide to partition the property by selling the whole and then dividing up the profits among the tenants in common according to their proportionate shares. This procedure is known as partition by sale.

Contribution

Should one tenant have expended his own money to maintain parts of the entire tenancy-in-common estate, then at the time of sale, he may seek to recoup the money he expended by seeking contribution from his co-tenants. Most jurisdictions will allow recovery of contribution for maintenance, repairs, taxes, mortgage payments and other tenant actions to maintain the status quo; however, most of them will not force contribution for actual improvements to the property.

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