Joint Tenancy: The Laws on Sharing Spaces

Q: I can't afford a place of my own, but am getting there.  One of my friends suggested that we buy a place together.  I'm game, but I'm not sure what that means as far as our legal rights to one another and to the townhouse we are looking at.

Whenever more than one person is purchasing a home, rights of ownership amongst the co-purchasers need be carefully addressed.  Deciding between a joint tenancy and a tenancy in common is the issue that usually comes up.   In a joint tenancy, each owner owns all of the property and their interests are not subject to division.  Both owners have equal and valid rights of ownership.   In a tenancy in common, the individual owners may own shares or pieces of the property, so that each party to the transaction holds a fiscally apportioned interest in the property, not a 100% unlimited right to access.  Sort of like shareholders, and the respective interests in the property need not be equal in amount.   

So in a joint tenancy, one owner can't make a legal decision affecting the property without the other's consent.   In a tenancy in common, one party can sell or mortgage their portion of the property, so it is in many respects owned separately from the other person’s portion.   This is significant because unlike a joint tenancy, where if one owner dies the property promptly reverts to the remaining property owner (which is why most marital properties are joint tenancies), a tenant in common's interests in the property passes on to that decedent's heirs.   And those heirs might have different ideas as to what to do with the property interests that might not jibe with those of the surviving tenant.

Therefore, while every circumstance calls for its own analysis, your situation may best be suited to a tenancy in common, backed by a real estate investment agreement whereby you and your friend set the terms for transfer or purchase of the other's interest in the event of a falling out or death.   Assuming you will have a lawyer assisting with the purchase and closing on the home, seek advice from them now so you can avoid later disputes.

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DISCLAIMER: This publication is distributed with the understanding that it does not constitute legal advice or establish an attorney/client relationship by way of any information contained herein. The information provided is for general purposes only, as readers are advised to consult with a qualified lawyer regarding the specifics of their particular circumstances.

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