It is common for people to share ownership of property. You might have share ownership with your spouse, your friends, your siblings, or as a business investment. Joint ownership of property, such as joint tenancy and tenancy in common, allows co-owners to possess property together, with joint tenancy featuring a right of survivorship where a deceased co-owner's interest passes directly to the surviving co-owners. When disputes arise among co-owners about the property's use or sale, they may pursue a partition action, where a court can either divide the property (partition in kind) or order its sale and split the proceeds among the owners (partition by sale), aiming for a fair resolution that reflects each co-owner's interest.. Regardless of whether or not there is an agreement, it is important to know what type of ownership you share with your co-owners, and what rights you have.
What is Joint Tenancy? (right of survivorship)
Definition: Joint Tenancy and Tenancy in Common are the two main forms of ownership in common. Joint tenancy is where co-owners own property together, and when one co-owner dies, the share of the deceased co-owner’s interest in the property passes to the other co-owners of the property, rather than passing according to the decedent’s will or to his or her heirs. This passing of the interest to the other co-owners is commonly referred to as a “right of survivorship.” For example, married people commonly own a house as joint martial property with a right of survivorship. When one spouse dies, the surviving spouse automatically absorbs the decedent’s interest in the house.
Requirements: While rules vary to some degree between states, Joint tenancy commonly requires that owners have the intent that a joint tenancy with a right of survivorship be formed. If there is a joint tenancy, owners generally have an equal and undivided interest, and each co-owner has the right to possess the entirety of the property. Some states require “four unities” in order for a joint tenancy to be formed:
- Interest of each tenant must be created at the same moment in time.
- All tenants must acquire title from the same legal instrument.
- All tenants must possess equal fractional undivided interests in the property and must last the same amount of time.
- Must have right to possess entire parcel.
Severance: While some jurisdictions do not allow severance, most states allow individuals to sever a joint tenancy by creating a tenancy in common with a writing. If an owner in a joint tenancy is allowed to sell his interest in the property, the property would revert to a tenancy in common. Generally speaking, you cannot sever a joint tenancy with your spouse unless you get a divorce.
What is Tenancy in Common
Where joint tenancy generally allows a right of survivorship, tenancy in common does not. In a tenancy in common, each co-owner owns property “severally,” which means they can sell or dispose of their interest in the property however they would like (provided it does not violate an ownership agreement or other law), and when they die, their interest will pass according to their will or to their heirs rather than the other co-owners. If it is unclear whether co-owners have a joint tenancy or ownership in common, usually ownership in common is the default assumption.
Joint Ownership Agreements
Joint Ownership Agreements allow co-owners to set rules for how they intend to purchase, maintain, and under what circumstances they may encumber the property or dispose of their interests in the property. The agreement should specify who the owners are, and whether they hold the property as joint tenants, or as tenants in common.
It can be difficult to get multiple owners to agree on how they want to do any of these things, so having an agreement in place can help to prevent future issues regarding the property.
Partition (forced sale or division of property)
Sometimes the interests of co-owners diverge, and they disagree on what they want to do with the property. If you are unable to come to an agreement with the other co-owners, it may be possible to go to the court and request that the property be sold, and proceeds divided between the owners. Alternatively, it may be possible to split the property into pieces for owners to own individually. Asking the court to sell or divide the property is called an action for partition. There are two main types of partition, Partition in Kind vs Partition by Sale.
Partition in Kind: Partition in kind is where the court severs the individual interests of the co-owners, splits up the property into different pieces, and gives each co-owner his or her own piece of the property. This is often an option where the property in question can be fairly broken up into parcels that adequately reflect each co-owner’s interest in the original property. For example, if co-owner A and co-owner B each have a 50% interest in property as tenants in common, a partition in kind should be able to split the property into two pieces that are roughly equal in value, one for each of the co-owners to own individually.
Partition by Sale: Partition by sale occurs when the entire property is sold, and the proceeds of that sale are split between the owners according to their proportional interest in the property. So, if co-owner A owns a 20% interest in the property, he or she should get 20% of the net proceeds. Partition by sale often makes sense where there is an improvement on the land, such as a building, which cannot easily be split into multiple parts.
Even though partition actions are generally granted by courts (assuming one can meet the legal requirements), filing for partition might not be the best first step. Co-owners can avoid court costs and attorney’s fees by agreeing between themselves, or with the help of an attorney or mediator, on how to partition or sell the property. If this fails, asking the court to compel partition is still an option.
Protection for Heirs
Some states have extra protection for heirs who have inherited an interest in property. The Uniform Partition of Heirs Property Act has been adopted by a minority of states for this purpose. If one or more of the co-owners of the property in question acquired their interest in the property from a relative, and other requirements of the statute are met, the court may determine that the property is “heirs property.” If the property is heirs property, co-owners that do not want partition will have the opportunity to buy out the co-owners that are compelling the partition. The court may weigh more factors in favor of a Petition in kind, rather than a partition by sale. And the court may take more procedural caution to make sure there is a fair purchase price, and that the co-owners get fair value for their ownership interest in the property.
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