Sharing Property Ownership: Why Tenants in Common Might Be Your Best Option

Understanding Joint Property Ownership

When multiple people decide to buy property together, there are several legal frameworks available. One increasingly popular option is the tenants in common arrangement, which provides flexibility that other joint ownership structures don’t offer.

Unlike other forms of co-ownership, tenants in common allows two or more individuals to hold an ownership stake in a single property while maintaining independence in how their portion is managed, sold, or inherited. The individuals don’t need to be married, related, or even close friends—any combination of people can structure their property rights this way.

What Makes Tenants in Common Different?

The defining characteristic of tenants in common is flexibility. Each owner can hold equal percentages of the property—say 50-50 split between two people—or distribute ownership in any proportion they prefer. One owner might hold 70% while another holds 30%, depending on factors like investment amounts or agreed arrangements.

This differs significantly from other ownership models. In joint tenancy, shares must be equal, and when an owner dies, their stake automatically passes to surviving owners rather than their heirs. Tenancy by the entirety, available only to married couples, also bypasses individual heirs in favor of the surviving spouse.

With tenants in common, you retain the ability to:

• Sell your portion independently
• Use your share as collateral for loans
• Modify ownership percentages after purchase
• Pass your stake directly to your chosen heirs

Real-World Scenarios Where This Structure Works

Divorcing couples: When a married couple holds property as tenancy by the entirety but then separates, they can transition into tenants in common. This allows each ex-spouse to name their own beneficiaries and make independent decisions about their ownership share.

Unequal financial contributions: Suppose a couple buys a home together, but one partner contributes significantly more capital—whether from personal savings or a parental gift. Tenants in common accounts for this imbalance. If the relationship later ends, the ownership percentages reflect each person’s actual investment, simplifying the division process.

Multiple unrelated investors: Three friends pooling resources to purchase rental property can each protect their own inheritance rights. When one owner dies, their heirs inherit their specific percentage rather than the property reverting entirely to the surviving owners.

The Critical Question: What Happens When Someone Dies?

This is where tenants in common truly stands apart. When one owner passes away, their share doesn’t automatically go to other property holders. Instead, it becomes part of their personal estate and passes to whoever they designated as beneficiaries in their will.

The remaining owners continue to hold their portions. However, the deceased owner’s share will likely go through probate court, where it’s distributed according to estate documents or state law if no will exists. This process can take months or even years and may involve significant legal costs.

While probate adds complexity and expense compared to structures with automatic survivorship rights, many people view this trade-off as worthwhile because it ensures their assets go to their chosen heirs rather than automatically to co-owners they may no longer have relationships with.

How Tenants in Common Compares

Key Takeaways for Property Owners

Choosing how to hold property jointly is a significant decision with long-term implications. Tenants in common offers unique advantages if you want to:

• Protect unequal investment contributions
• Ensure your portion goes to your specific heirs
• Maintain flexibility in buying, selling, or refinancing your share
• Avoid automatic asset transfer to co-owners

The trade-off is accepting the probate process when an owner dies, which can be time-consuming and costly. Before committing to any ownership structure, especially tenants in common, it’s wise to consult with a qualified legal or financial professional who can review your specific situation and goals.

The specifics of your tenants in common arrangement should be clearly documented in your property deed or a separate agreement between all parties, spelling out each owner’s percentage, rights, and responsibilities.