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Undivided Interest

In real estate, an undivided interest refers to a situation where two or more individuals share ownership of a single piece of property. This concept is commonly associated with a form of co-ownership known as tenants in common.

When individuals own property as tenants in common, each has an undivided interest in the entire property, rather than a claim to a specific, physically demarcated portion of the property. Here’s what that means in practice:

  1. Equal or Unequal Shares: Tenants in common may own equal or unequal shares of the property. For example, one owner might have a 50% undivided interest, while two other owners might have a 25% undivided interest each.
  2. No Separate Control: Each tenant in common has the right to use and enjoy the entire property, even if their share of ownership is less than the others. There is no physical division of the property; the “undivided” aspect means the property remains whole despite multiple owners.
  3. Individual Rights: Each co-owner has the right to sell, convey, mortgage, or bequeath their undivided interest to others. However, they cannot sell or dispose of the property as a whole without the agreement of all co-owners.
  4. Inheritance: Upon the death of a tenant in common, their interest in the property does not automatically pass to the surviving co-owners (as it would with a “joint tenancy with right of survivorship”). Instead, it passes to the heirs of the deceased or according to their will, introducing new individuals into the tenancy in common.
  5. No Survivorship Rights: Unlike joint tenancies, there is no right of survivorship among tenants in common. This means that when one tenant in common dies, their interest in the property does not automatically transfer to the remaining tenants in common.
  6. Partition: Any tenant in common has the right to seek a partition of the property, which is a legal process to divide the property if it’s physically possible or sells the property and divide the proceeds if it’s not.

The undivided interest structure is popular in various real estate ventures, from investment properties to family homes, as it allows individuals to pool their resources to purchase property and share the benefits and responsibilities of ownership. However, it also necessitates a great deal of trust and cooperation among the co-owners and can sometimes lead to complications, especially when one party wishes to sell or if there is a dispute among the owners.