Table of Contents
- What Is Tenancy in Common (TIC)?
- Understanding How Tenancy in Common Functions
- How to Dissolve a Tenancy in Common Arrangement
- Navigating Property Taxes in a Tenancy in Common
- Exploring Alternative Tenancy Arrangements
- An Overview of Joint Tenancy
- Understanding Tenancy by Entirety
- Advantages and Disadvantages of Tenancy in Common
- Real-World Example: Tenancy in Common in Action
- What Benefit Does Tenancy in Common Provide?
- What Happens When One of the Tenants in Common Dies?
- What Is a Common Dispute Among Tenants In Common?
- The Bottom Line
What Is Tenancy in Common (TIC)?
Let me explain tenancy in common (TIC) directly: it's a way for multiple parties to own interests in a property with flexible percentages. Unlike joint tenancy, there's no right of survivorship here, so when an owner dies, their share goes to their estate, not the other owners. You need to understand how TIC differs from joint tenancy and tenancy by entirety to make smart choices about property ownership.
TIC is one of three main types of shared ownership, alongside joint tenancy and tenancy by entirety.
Key Takeaways
- Tenancy in Common (TIC) lets multiple parties own percentages of a property without survivorship rights.
- TIC owners can manage, sell, or transfer their share independently, passing it to heirs.
- Disputes can happen in TIC due to unequal property use, even with equal access.
- Tenancy by entirety and joint tenancy offer different rights and obligations as alternatives.
- Property taxes in TIC are often shared, with potential full liability for each owner via joint-and-several rules.
Understanding How Tenancy in Common Functions
As a tenant in common, you share interests and privileges across the entire property, but you can own a different percentage or financial share from others. You can create TIC agreements anytime, and new owners can join even after the initial setup. Each of you can sell or borrow against your own portion independently.
Remember, you can't claim a specific part of the property as yours, no matter your percentage. If you die, your share goes to your estate, not the other owners, since there's no survivorship. You can, however, name co-owners as beneficiaries in your estate plan.
How to Dissolve a Tenancy in Common Arrangement
If you want to end a TIC, you or other tenants can buy out shares through a joint agreement. If no agreement happens, a partition action might be needed, either voluntarily or by court order.
In a partition in kind, the court divides the property into individually owned parts. No one is forced to sell against their will. If you can't agree, consider a partition by sale, where the property is sold and proceeds divided by ownership shares.
Navigating Property Taxes in a Tenancy in Common
A TIC doesn't legally split the property, so you usually get one tax bill for the whole thing, not divided by percentages. Many areas apply joint-and-several liability, meaning any owner could be on the hook for the full bill, regardless of their share.
You can deduct your contributions on income taxes. If joint-and-several liability applies, deduct what you paid; otherwise, deduct based on your ownership percentage.
Exploring Alternative Tenancy Arrangements
Beyond TIC, you have joint tenancy and tenancy by entirety as options for shared ownership.
An Overview of Joint Tenancy
In joint tenancy, you and others get equal shares under the same deed at the same time—50% each for two tenants, for example. To buy out another, the property must be sold with equal proceeds. Unlike TIC, survivorship means the share passes to surviving owners, not the estate. Some states default to this for married couples, others to TIC.
Understanding Tenancy by Entirety
Tenancy by entirety (TBE) in some states treats the property as owned by one entity, with spouses having equal, undivided interest. Unmarried parties in similar setups each have full 100% interest as if sole owners.
Advantages and Disadvantages of Tenancy in Common
Buying property with family or partners via TIC makes it easier to afford by sharing costs. The number of tenants can change, and ownership degrees vary. But when mortgaging, all sign the loan, and default lets the lender seize from anyone. If someone stops paying, others cover the full loan. You control your share via will, but heirs might force sales or divisions, leading to unwanted co-owners.
Pros and Cons
- Pros: Facilitates property purchases, number of tenants can change, different degrees of ownership possible.
- Cons: No automatic survivorship rights, all tenants equally liable for debt and taxes, one tenant can force property sale.
Real-World Example: Tenancy in Common in Action
In California, ownership types include community property, partnership, joint tenancy, and TIC, with TIC as default for unmarried joint buyers unless specified otherwise. Firms like SirkinLaw note TIC is common in San Francisco for homeownership, and it's growing in places like Oakland, Berkeley, Santa Monica, Hollywood, Laguna Beach, San Diego, and counties like Marin and Sonoma.
What Benefit Does Tenancy in Common Provide?
TIC lets two or more parties own real property jointly, with the key benefit that you can sell your share or pass it to heirs.
What Happens When One of the Tenants in Common Dies?
The deceased's share goes to their estate per their will or plan, while survivors keep their shares.
What Is a Common Dispute Among Tenants In Common?
Disputes often stem from equal usage rights regardless of ownership percentage, with issues when a minority owner overuses or misuses the property, as maintenance is split evenly.
The Bottom Line
Tenancy in Common is shared ownership where parties hold different percentages and can manage shares independently, without survivorship—shares go to estates on death. You should weigh how it eases purchases and ownership changes against risks of disputes, debts, and taxes.
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