10. What types of co-ownership interests exist in property?
It is very common for individuals (particularly family members) and businesses to own property collectively. The most common forms of co-ownership of property are as follows:
• Joint Tenancy – All owners of the real property are indicated on the title and each owns an equal an undivided interest in the property. There is a “right of survivorship” among owners. The interests of all owners are unified, so that when one owner passes away the other owners acquire the deceased owner’s interest. If any owner seeks to sell or transfer her interest in the property, the joint tenancy is broken and the ownership becomes a tenancy in common.
• Tenancy in Common – Each owner owns a specific percentage of the property. This percentage of ownership is separate from other owners’ interest. The ownership interest is not unified; rather, it is “divisible”. Any owner can sell her ownership interest and there is no right of survivorship. If the owner passes away, her ownership interest passes to her heirs and assigns. The remaining owners do not acquire the deceased owner’s interest.
• Tenants by the Entirety – This is a method of joint ownership in property by married spouses. Each spouse owns and equal and undivided interest in the real property. There is a right of survivorship, so either spouse will inherit complete ownership of the property when the other spouse passes. The land passes automatically without having to go through probate. Neither spouse may transfer the property without the other spouse’s consent. There is a presumption of tenancy by the entirety in most states, unless the deed or title indicates that only one spouse is the owner of the property.
⁃ Practice Question: Elaine and Jerry are co-owners of property that they use in their business venture. They own the property as joint tenants. What happens to the property if either Jerry or Elaine pass away?