Co-tenancy, as part of Tenants in Common (TIC), refers to a legal arrangement where two or more parties share ownership rights in a single property. This form of ownership allows each tenant in common to have an undivided interest in the property, meaning that each owner has the right to use and possess the entire property, even though they only own a fraction of it. The shares owned by each co-tenant can be equal or unequal, but no matter the size of the share, each tenant has the right to use the entire property.
Here are some key points about co-tenancy in the TIC industry:
- Undivided Interest: Each co-tenant owns a specific percentage of the entire property, not a physically divided section of it.
- Transferability: Co-tenants can sell, convey, mortgage, or transfer their ownership interest without the consent of the other co-tenants.
- Survivorship: There is no right of survivorship in a tenancy in common arrangement. This means that if one co-tenant dies, their interest in the property will pass according to their will or the state’s laws of intestacy, not automatically to the surviving co-tenants.
- Partition: A co-tenant can file for a partition action, which is a legal way to dissolve the tenancy in common if the parties cannot agree on the use or sale of the property.
- Management and Expenses: All co-tenants share the rights and responsibilities of property management and expenses proportional to their ownership shares unless agreed otherwise.
Co-tenancy arrangements are popular in real estate investments where multiple parties want to pool their resources to purchase property or in situations where family members inherit property and own it jointly. It provides flexibility for individual owners but also requires mutual cooperation for decisions regarding the property.