Tenant in common facts

Written by carrie ferland
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Tenancy in common is a type of concurrent estate, the concept of holding property jointly with one or more other individuals. Despite its name, tenancy in common is not a form of leasing, but a form of ownership. Each individual who holds a stake in a piece of real property is called a tenant in common. There is no limit to how many tenants enter into a tenancy in common, and the more tenants there are, the lower the initial investment will be. Conversely, the fewer tenants there are, the higher the final return will be.


When two or more individuals--like roommates, for example--want to purchase a home together, a tenancy in common is a secure way to protect each individual owner’s interest in the property. The agreement affords each owner a separate-but-equal share in the entire property as a whole instead of affording one owner control over the entire property. The tenants split the mortgage, taxes and other expenses equally, making the property more affordable than if each owner had purchased a house on his own. At the same time, all owners have a legal interest in the property, giving the owners more advantages than if one owner leased the property for use by the remaining tenants.

Tenancy in common is also one method of purchasing an investment property with multiple shareholders. This significantly reduces the initial investment by sharing it across two or more parties, allowing shareholders to invest in real property when they could not afford to otherwise. The agreement protects both the investment and the return, because each investor has his own individual stake that is separate--yet still connected to--the other investors’ interests.


Each tenant in common has an individual share, called an interest, in the property. Combined, these shares make up the total interest in the property. Most tenancy in common agreements split the shares equally amongst the tenants. If two tenants enter into the agreement, then each tenant holds a 50 per cent interest. You can adjust this, however, to split the interest in any fashion to meet your needs, provided the total sum of all shares is 100 per cent. If you give one tenant more interest, she will have a higher initial investment and more liabilities (for example, property tax liabilities) than everyone else will. On the other hand, the tenant with more interest receives a higher return if the tenants choose to lease or sell the property other investors.


Entering into a tenancy in common is formidably simple. All owners sign a tenancy-in-common agreement, which outlines the name of each owner, their interest percentage (typically an even share amongst all parties; for example, 50 per cent for two owners, 33.3 per cent for three, and so on), the physical address of the shared property and the date on which the agreement becomes effective. You can add additional clauses as needed to meet your specific needs; for example, if you are creating a tenancy in common for an investment property, you should address management, leasing and future sale. All parties must sign the agreement at the same time. At least one disinterested witness should witness the signatures and sign as well.

Right of Survivorship

A right of survivorship transfers an individual owner’s share in a property to the remaining tenants upon the former owner’s death without consideration on the latter tenants’ part. Unlike joint tenancy, tenancy in common has no right of survivorship. Individual interests are inheritable, meaning an owner can bequeath his share in a tenancy in common to his beneficiaries upon his death. A tenant can, however, bequeath his share to the remaining tenants in any manner he sees fit if he so desires.


Tenants in a tenancy in common can terminate the arrangement at any time. All tenants can jointly choose to end the agreement by selling their shares to one tenant, effectively ending the agreement. Tenants can also jointly sell their shares to someone outside of the agreement, which would give the buyer total interest in the entire property. All tenants would have to agree to such a sale to terminate the agreement. Tenants are also free to sell their individual interests at any time, although a buyer would then enter into the tenancy in common.

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