There are a number of different arrangements that can be made when two or more people co-own or co-purchase a property. One of the most common types of property ownership is called "tenants in common." Within tenants in common, there are a number of potential scenarios of co-ownership that can occur.
Assigned Usage Rights
While the term "tenants in common" is generally an umbrella term used to describe the shared ownership of a property, there are various different types of tenants in common situations. Some tenancy in common ownership agreements assign very specific usage rights to each co-owner. This occurs when space assignment co-ownership often takes place in an apartment, storage space or office unit, or when a time constraint to ownership exists, such as the case with timeshare or “fractional” ownership.
Unassigned Usage Rights
Tenants in common do not always have assigned usage rights that dictate the percentage of property that they own or their right to use the property. For instance, when an inheritance results in a group of people taking ownership of a property there is a tenancy in common that does not have assigned property usage rights for co-owners. The co-owners of such an agreement have no distinguished right to a set percentage of the property, nor do they have a distinguished right to the property for a set timeframe.
Advantages of Tenancy in Common
Usage rights aside, a tenancy in common can be easily established through a written agreement that dictates ownership interest in a particular property. Since the co-owners in a tenants in common agreement each own the asset, they can sell their interest or gift the property interest to a person of their choice without question, provided the recipient is not already a tenant in common. In the event that an owner dies or becomes disabled, all other owners are unaffected in terms of accessing or disposing of their share of the property.
Disadvantages of Tenancy in Common
When more than one individual has interest in a property there is a potential for disagreement. What begins as a good thing could result in an unwelcome change if a tenant in common sells his interest to an outside party that is unpleasant to the remaining owner. While owners in the tenancy can sell their interests, completely breaking up the tenancy is a difficult process if there is disagreement among the parties about how to dispose of the property. In such a scenario, tenants have to seek relief through the courts for a "partition action," which involves selling the property and dividing proceeds between tenants in common. It can be time consuming and expensive for all involved.
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