Joint Tenancy is a legal term used in the real estate investment industry to describe a specific form of ownership by two or more parties. It has certain characteristics that distinguish it from other types of co-ownership, such as tenancy in common.
Here’s a more detailed definition:
- Equal Ownership: In a joint tenancy, each party owns an equal share of the property. If there are two joint tenants, each owns 50%; if there are three, each owns 33.33%, and so on.
- Right of Survivorship: One of the most important features of joint tenancy is the right of survivorship. This means that if one of the joint tenants dies, their share of the property automatically passes to the surviving joint tenants, rather than becoming part of the deceased’s estate. This can bypass probate, making it a more efficient way to pass property upon death.
- Unity of Time, Title, Interest, and Possession: These four unities must be present for a joint tenancy to exist. Unity of Time means all tenants acquire the property at the same time. Unity of Title means all tenants acquire the property by the same deed or will. Unity of Interest means all tenants have an equal interest in the property, and Unity of Possession means all tenants have an equal right to possess the entire property.
- Severance of Joint Tenancy: Joint tenancy can be severed or broken by various means, including selling or transferring an interest. If one joint tenant sells their share, the new owner becomes a tenant in common with the remaining joint tenant(s), and the joint tenancy is broken.
- Potential Benefits and Drawbacks: Joint tenancy offers some benefits, like avoiding probate and providing a clear succession of the property. However, it also presents potential drawbacks, such as a lack of control over the property after death (since it passes automatically to the other tenant) and potential conflicts between joint tenants.
- Common Usage: Joint tenancy is often used in specific situations, such as between married couples or close relatives who wish to ensure that property passes smoothly upon death.
Joint tenancy, with its specific characteristics, can have significant legal and financial implications. Therefore, those considering this form of ownership should consult with a legal or real estate professional to fully understand its impact on their particular situation.