When it comes to owning property in California, there are two typical ways that people can hold title to a residential or commercial property: Joint Tenancy and Tenancy in Common. While these terms might sound comparable, they have distinct legal implications that can have a considerable impact on your rights and obligations as a residential or commercial property owner.

In this article, we will explore the crucial differences in between Joint Tenancy and Tenancy in Common, and help you figure out which alternative is best fit for your particular situation.

Firstly, Let's begin with the fundamental definitions:

Joint Tenancy Definition

Joint Tenants is a type of residential or commercial property ownership where two or more people own residential or commercial property together with equivalent rights. It is characterized by the "right of survivorship," suggesting when one owner dies, their share of the residential or commercial property instantly transfers to the enduring owners. This process is called the "right of survivorship." Joint Tenancy is frequently utilized for married couples or member of the family who wish to make sure that the making it through owner(s) will inherit the residential or commercial property without the need for probate.

Common Use: This type of ownership is popular amongst married couples or member of the family, as it makes sure that the residential or commercial property passes to the making it through owner(s) without the need for probate.

Legal Implications: In Joint Tenancy, each owner has a concentrated interest in the entire residential or commercial property. The right of survivorship is a crucial feature, bypassing the probate process and directly moving ownership to the surviving joint occupants.

Joint Tenancy Advantages And Disadvantages

Right of Survivorship: The residential or commercial property immediately passes to the surviving owners upon the death of one owner, preventing probate.
Equal Ownership: Each occupant has an equal share and equivalent rights to the whole residential or commercial property.
Simplicity in Estate Planning: Simplifies the process of moving residential or commercial property upon death.

Lack of Flexibility in Bequeathing Residential or commercial property: Owners can not pass their share of the residential or commercial property to anyone besides the joint tenants upon death.
Potential for Disputes: If one owner wants to offer or encumber the residential or commercial property, all owners must concur.
Credit Risk: The residential or commercial property might be at danger if one of the joint occupants faces legal judgments or insolvency.

Tenancy in Common Definition

Tenants in Common is a method of holding title where 2 or more individuals own residential or commercial property together, however with separate and unique shares. Each owner can sell, move, or mortgage their share individually. In the occasion of an owner's death, their share of the residential or commercial property passes to their beneficiaries or recipients as directed by their will or through intestate succession.

Common Use: This is often utilized by organization partners, buddies, or financiers who want to own residential or commercial property together while keeping separate control and ownership over their particular shares.

Legal Implications: Upon the death of an owner, their share passes to their beneficiaries or as directed by their will, instead of instantly transferring to the other owners. This allows for more versatility in estate preparation.

Tenancy in Common Benefits And Drawbacks

Advantages:

Flexible Ownership Shares: Owners can hold unequal shares and can individually manage their portion of the residential or commercial property.
Independence in Decision Making: Each owner can sell or overload their share without needing approval from the others.
Estate Planning Flexibility: Owners can bequeath their share to anyone in their will.

Disadvantages:

No Right of Survivorship: The residential or commercial property doesn't immediately move to the other owners upon an owner's death, possibly causing complex estate concerns.
Potential for Disagreements: Differences in management or financial investment objectives can cause conflicts.
Risk of Partition: Any owner can submit for a partition action, which can force the sale or division of the residential or commercial property.

Which is Better Tenancy In Common or Joint Tenancy?

The 2 most common methods to jointly own residential or commercial property with several persons in California are joint tenancy and tenancy in typical California law. The default technique of co-ownership is in fact occupancy in typical California. In other words, unless the deed specifically mentions the technique of co-ownership, the co-owners will hold title as tenants in typical California. Accordingly, it is necessary to specify the method of co-ownership in the deed, specifically if the co-owners do not desire to own the residential or commercial property as renters in common. (Click here to check out the differences between deed and title)

A few of the similarities and differences in between these 2 approaches of co-ownership are described below.

Joint Tenants vs Tenants In Common California Law Similarities

● Each owner has an equivalent right to possess, use, and benefit from the entire residential or commercial property

● Each owner is responsible for their proportionate share of the expenses of the residential or commercial property, including payments of mortgage, upkeep, residential or commercial property taxes, insurance, and so on ● Each owner is entitled to their proportional share of income from the residential or commercial property, such as rental earnings

● Each owner has a right to encumber their different interest in the residential or commercial property without impacting the co-owner(s) interest(s)

Tenancy in Common vs Joint Tenancy - Key Differences

Transfer Upon Death: In Joint Tenancy, ownership automatically moves to the surviving owners, while in Tenancy in Common, it passes according to the departed owner's will or intestate succession.
Ownership Shares: Joint Tenancy involves equal ownership shares, whereas Tenancy in Common enables unequal shares.
Independence in Ownership: Tenancy in Common deals more independence to each owner concerning their share of the residential or commercial property.

Accordingly, one of the primary issues to think about when choosing whether to collectively own residential or commercial property as renters in typical California or joint renters is how the owner's interest will move upon death.

For example, if a couple or parent and child jointly own residential or commercial property, then holding title as joint renters is more effective as the decedent's interest will instantly transfer to the surviving co-owner without the inconvenience of going through probate or other case. However, if pals or siblings collectively own residential or commercial property, then holding title as tenants in common might be more suitable so that each owner can dictate who will receive their interest in the residential or commercial property when they die.

FAQ - Joint Tenants and Tenants in Common

Q1: Can a joint tenancy be converted into an occupancy in common?

Yes, a joint occupancy can be transformed into a tenancy in common through a procedure called "severance," which generally includes one of the joint tenants transferring their interest to themselves or another celebration.

Q2: How is the sale of residential or commercial property dealt with in occupancy in common?

In tenancy in common, each owner can sell or transfer their private share independently. However, selling the whole residential or commercial property typically needs agreement from all co-owners or a court order.

Q3: What takes place if a joint renter wants to offer their share?

In joint tenancy, an individual can not offer their share without the permission of the other joint renters. Selling or moving their share will generally transform the joint tenancy into a tenancy in common for that share.

Q4: How are expenses and revenues divided in occupancy in typical?

In tenancy in common, expenditures and profits are normally divided according to each owner's share in the residential or commercial property, which might not necessarily be equivalent.

Q5: Is joint tenancy a great choice for unmarried couples?

Joint tenancy can be a good option for unmarried couples as it allows for the right of survivorship, ensuring that the residential or commercial property passes directly to the enduring partner without probate.

Q6: Can financial institutions of one renter in common claim against the residential or commercial property?

Creditors of one renter in common can declare against that tenant's share of the residential or commercial property, but not versus the shares of the other owners.

The Schorr Law real estate lawyers have a lot of experience handling occupancy disagreements, partition actions, and quiet title actions also. We regularly handle disagreements worrying ownership of real residential or commercial property regardless of whether a celebration is arguing real ownership is precisely shown by record title. To arrange a consultation with among our lawyers, contact us today.