Co-Ownership: Legal Issues with Jointly Owned Property

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 What Is Co-Ownership?

Shared property ownership can also be referred to as co-ownership, or joint ownership. Any of these terms can be used to describe real property. All land and fixed immovable structures are considered to be real property, such as an apartment or home. “Real estate” and “real property” may be used interchangeably, as they refer to the same thing.

Real property may include anything that is permanently located on, within, or under the land. By definition, real property may include oil, gases, and minerals found under the land. Another term commonly used to refer to real property would be “premises.”

Such property can be jointly owned by two or more people; meaning, all of the people involved hold title to the property. Joint ownership of real property can be categorized as the three most common types of ownership:

Tenancy in common distributes the shares of property according to how much each person contributed to the purchase of the property. When one owner dies, their shares of the property are passed on to their surviving heirs.

Joint tenancy differs in that when an owner dies, their shares go to the other property owner(s). This is referred to as the right to survivorship. In order for an ownership arrangement to be considered joint tenancy, all of the following requirements must be met:

  • Interest, meaning that every owner has the same interest;
  • Possession, meaning that every owner holds an undivided interest;
  • Time, meaning that all owners receive their property interest simultaneously; and
  • Title, meaning that all owners acquire their property interest with the same deed.

Tenancy by the entirety only applies to married couples, as the sale of the property is prohibited without the consent of both spouses. When one spouse dies, the right to survivorship is invoked and their shares go to the surviving spouse.

Your legal rights and obligations as a property owner will largely depend on the type of co-ownership agreement you have entered into. Generally speaking, the default rule for co-ownership is tenancy in common. An example of this would be if an unmarried couple is living together in a home. Courts generally presume that that property is co-owned by the couple as a tenancy in common.

Can I Force the Sale of a Jointly Owned Property?

Whether you can force the sale of a jointly owned property may depend on the state in which the property is located. An example of this would be how in Texas, doing so is possible through a court-ordered partition. This legal term refers to the division of real property among joint owners. The court may order one of two types of partition:

  1. Partition in kind, referring to the actual, physical division of the property; or
  2. A sale of the property, judicially ordered, when partition in kind would not be possible or would not be fair and equitable.

The process involves a lawsuit which could result in considerably large expenses which are to be shared by all of the property’s joint owners.

What Happens If a Co-Owner Dies?

What will happen to the ownership interest of a deceased co-owner depends on the type of co-ownership agreement that was established.

  • Joint Tenancy: If you own property as joint tenants, your ownership rights include the right of survivorship. As previously mentioned, this means that when one joint tenant dies, their interest in the property automatically goes to the surviving joint tenant;
  • Tenancy in Common: In opposition to joint tenancy, tenancy in common does not include the right of survivorship. What this means is that when one co-tenant dies, their interest in the property does not automatically go to another co-tenant. Unfortunately, probate will probably not be avoided; meaning, the rights of the surviving estate of that co-owner will be determined by a will or inheritance scheme of that state. Fortunately, whoever retains control over the ownership interest of the property may better reflect the intentions of the now deceased co-tenant; or
  • Tenancy By the Entirety: Similar to joint tenancy, tenancy by the entirety has a right of survivorship. An example of the definition of tenancy by the entirety would be a marital property interest between legally married partners. Tenancy by the entirety is essentially joint tenancy, but held by legally married spouses. In states that recognize this form of co-ownership, there is an assumption that conveyance to married spouses will automatically create tenancy by the entirety, unless otherwise stated. The benefits here are avoiding delays and complications, as well as the costs of probate. Additionally, the right of survivorship may achieve the same outcomes as a will.

Co-owners and spouses under a tenancy by the entirety should keep in mind that even when there is a will with contrary provisions, right of survivorship could be a detriment to the enforceability of those will provisions.

Can Co-Ownership Be Freely Transferred?

When transferring or selling a jointly owned property, if there is no right of survivorship, a co-owner is generally free to transfer their property interest. Essentially, when a co-owner sells their own interest, the buyer becomes a new co-owner so that tenancy in common continues. What this means is that unlike a joint tenancy, a tenancy in common is freely transferable.

This sort of property transfer may happen in many different ways, including:

  • The sale of ownership interest in the property;
  • Passing the property by will, deed, or some other conveyance; and/or
  • Intestacy.

However, it is important to keep in mind that a co-owner cannot transfer the ownership rights of other co-owners without permission. Additionally, if there is a right to survivorship, one co-owner or spouse cannot unilaterally convey the property without permission or consent of the others involved in the co-ownership.

What Should Those Considering Co-Ownership Know?

By being prepared and informed, joint property ownership disputes can be more easily avoided and/or resolved. Tenancy in common has several distinct characteristics that should be considered, such as:

  • Each co-owner has the right to use and possess the entire property;
  • Each co-tenant owns a certain share of the property as their own;
  • Co-owners may hold unequal ownership shares; and
  • Maintenance and other costs are shared in proportion to ownership shares. Meaning, if ownership shares are unequal, the person with the largest share will have the largest financial responsibility.

Joint tenancy and tenancy by the entirety require four unities:

  • Time: The spouse’s interests must vest simultaneously;
  • Title: Tenancy by the entirety must be created by the same instrument or document;
  • Interest: Spouses must take interest of the same kind, share, and duration; and
  • Possession: Spouses have an equal right to possess and enjoy the entire property.

It is also worth discussing that a tenancy by the entirety can be terminated in several different ways. Although there is no way for one co-owner to do so on their own, some examples of how the entirety can be terminated include:

  • The death of a co-owner spouse;
  • Divorce or dissolution;
  • Mutual agreement of co-owner spouses;
  • A joint creditor is attempting collection; and/or
  • Conveyance, should both spouses join in and consent to the termination.

In terms of tenancy by the entirety, co-ownership is only available to legally married spouses, not cohabiting couples. It is important to note that not all states recognized tenancy by the entirety, and states that do may or may not provide recognition for married same-sex couples.

Why You Should Seek the Help of a Property Lawyer?

If you have any questions about legal issues with jointly owned property, you should consult with an experienced local property lawyer. Because much of property law varies from state to state, an area attorney will be best suited to helping you understand your state’s specific laws regarding the matter. An attorney can also represent you in court, as needed, should any legal disputes arise. Finally, an attorney will be able to help guide you through the transfer or forced sale process.

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