A way for two or more people to share ownership of real estate or other property. When two or more people own property as joint tenants and one owner dies, the other owners automatically own the deceased owner’s share. For example, if a parent and child own a house as joint tenants and the parent dies, the child automatically becomes full owner. Because of this right of survivorship, no will is required to transfer the property; it goes directly to the surviving joint tenants without the delay and costs of probate.
n. a crucial relationship in the ownership of real property, which provides that each party owns an undivided interest in the entire parcel, with both having the right to use all of it and the right of survivorship, which means that upon the death of one joint tenant, the other has title to it all. Procedurally, on the death of one joint tenant, title in the survivor is completed by recording an “affidavit of death of joint tenant,” describing the property and the deceased tenant, with a death certificate attached, all of which is sworn to by the surviving joint tenant. This process avoids probate of the property, but may have some tax consequences, which should be explored with an accountant at the time of recording the original deed. If the owners do not want full title to the property to pass to the survivor, then joint tenancy should not be used. Joint tenancy (as well as any other common ownership) between a parent and a minor child should be avoided since the property cannot be transferred in the future without the parent becoming appointed a guardian of the child’s estate by court order, and the property and the proceeds therefrom will be under court control until the child is 18. In community property states, some courts have found that joint tenancy presumes that the property is not community property (which could result in a loss of estate tax limitation on the death of the first spouse to die), but proof of community interests can be established. A bank account held in joint tenancy also presumes a right of survivorship, but this presumption can be overcome by evidence that the account was really the property of only one, and the joint tenancy was for convenience.
A concurrent estate or co-tenancy is a concept in property law, particularly derived from the common law of real property, which describes the various ways in which property can be owned by more than one person at a given time. The parties who own property jointly are referred to as co-tenants or joint tenants. Most common-law jurisdictions recognise three kinds of concurrent estate: tenancy in common, joint tenancy with right of survivorship, and tenancy by the entirety. Many jurisdictions simply refer to a joint tenancy with right of survivorship as a joint tenancy, but a few U.S. States treat the phrase joint tenancy as synonymous with a tenancy in common.
The type of ownership determines the rights of the parties to convey their interest in the property to others, to will the property to their devisees, or to sever their joint ownership of the property. Just as each of these affords a different set of rights and responsibilities to the joint owners of property, each requires a different set of conditions in order to exist.
It should be borne in mind that the law can vary from place to place, and that the following general discussion will not be applicable in its entirety to all jurisdictions.
If one or more people have an interest in land as joint tenants, then they are co-owners of that land. This form of co-ownership of land is characterised by the indivisibility of the estate: no individual joint tenant can identify his specific ‘piece’ of the estate. This means that the estate can only be transmitted in its entirety, and if one of the joint tenants dies, his share is not inheritable by his successors (‘Right of Survivorship’). This is in contrast to the concept of tenancy in common, where each owner has a specific interest that is transmissible.
Under the Law of Property Act (1925), joint tenancy is the only legal form of co-ownership of land. This form of co-ownership is appropriate for, for example, married couples, but it is not very useful to businesses, which usually prefer a tenancy in common. To create a tenancy in common requires that the legal owners hold the property on trust as a tenancy in common for the beneficiaries. In such cases, it is quite common for the trustees and the beneficiaries to be the same people; this is simply the device that the law has created to give effect to a tenancy in common.
Rights And Duties Shared By All Co-Tenants
Co-tenants, irrespective of the type of tenancy, share certain rights to the property, except to the extent they have modified these rights through an agreement among themselves:
- Each tenant has an unrestricted right to access the property. Where one co-tenant wrongfully excludes another from making use of the property, the excluded co-tenant can bring a cause of action for ouster and may receive the fair rental value of the property for the time that he was dispossessed.
- Each tenant has a right to an accounting of profits made from the property. If the property generates income, such as rent, each tenant is entitled to a proportion of that income.
- Each tenant has a right to contribute to the costs of owning the property. Co-tenants can be forced to contribute to the payment of expenses such as property taxes and mortgages on the entire property.
Co-tenants do not have any obligation to contribute to any costs of repairing or improving the property. If one co-tenant adds a feature that enhances the value of the property, that co-tenant has no right to demand that any others share the cost of adding that feature, even if other co-tenants reap greater profits from the property because of it. However, at partition, a co-tenant is entitled to recover the value added by his or her improvements of the property. Conversely, if the co-tenant’s “improvements” decrease the value of the property, the co-tenant is responsible for those decreases as well.
Furthermore, each co-tenant can independently encumber their own share in the property by taking out a mortgage on that share (although this may effectively convert a joint tenancy to a tenancy in common, as described below); other co-tenants have no obligation to help pay a mortgage that only runs to another tenant’s share of the property, and the mortgagee can only foreclose on that share. Bank loans secured by mortgages on individual shares of co-owned property is one of the most rapidly expanding areas in the mortgage lending industry.
Finally, co-tenants owe one another a duty of fair dealing. Because of this, any co-tenant who acquires a mortgage claim against the property must give his co-tenants a reasonable opportunity to purchase proportionate shares in that claim.
Tenancy In Common
Tenancy in common is the default form of concurrent estate, in which each owner, referred to as a tenant in common, is regarded by the law as owning separate and distinct shares that may differ in size. This form of ownership is common where the co-owners are not married or have contributed different amounts to the acquisition of the property. Also, if joint owners had attempted to use another form of joint ownership, such as a joint tenancy with right of survivorship or a tenancy by the entirety, and the effort was for some reason invalid, the joint owners would then be tenants in common. If conclusive evidence is not available of the desire to create a tenancy with rights of survivorship or a tenancy by the entirety, courts will determine that a tenancy in common has in fact been created.
Tenants in common have no right of survivorship, meaning that if one owner dies, that owner’s interest in the property will pass by inheritance to that owner’s devisees or heirs, either by will or by intestate succession.
Destruction Of A Tenancy In Common
Where any party to a tenancy in common wishes to destroy the joint interest, he or she can do so through a partition of the property—a division of the land into distinctly owned plots if such division is legally permitted based upon zoning and other local land use restrictions—or, where such division is not permitted, a forced sale of the property followed by a division of proceeds.
If the parties are unable to agree to a partition, any or all of them may seek the ruling of a court to determine how the land should be divided up and physically divide it between the joint owners (partition in kind), leaving each with ownership of a portion of the property representing their share. Courts may also order a partition by sale in which the property is sold and the proceeds are distributed to the owners. Where local law does not permit physical division, the court must order a partition by sale.
Each co-owner is entitled to partition as a matter of right, meaning that the court will order a partition at the request of any of the co-owners. The only exception to this general rule is where the co-owners have agreed, either expressly or impliedly, to waive the right of partition. The right may be waived either permanently, for a specific period of time, or under certain conditions.
Joint Tenancy With Right Of Survivorship
A joint tenancy with right of survivorship, or JTWROS, is a type of concurrent estate in which the joint owners have a right of survivorship, meaning that if one owner dies, that owner’s interest in the property will automatically pass to the remaining owner or owners. On the death of one of the tenants, the whole of the property passes to the remaining tenant(s); this is the “right of survivorship.” The deceased tenant’s property interest simply evaporates by operation of law and cannot be inherited by his heirs, which means it avoids going through probate. Under this type of ownership, the last owner living takes all.
It is important to note, however, that creditors’ claims against the deceased tenant’s estate may, under certain circumstances, be satisfied by the portion of ownership previously owned by the deceased but now owned by the survivor or survivors. In other words, the deceased’s liabilities can sometimes remain attached to the property.
This form of ownership is common between husband and wife, parent and child, and in any other situation where parties want absolute ownership to immediately pass to the survivor. For bank and brokerage accounts held in this fashion, the acronym JTWROS is commonly appended to the account name as evidence of the owners’ intent.
In order to create this type joint ownership, the party or parties seeking to create it must use specific language indicating that intent. For example, if Joey wishes to convey property for Kelly and Lisa to share as joint tenants with the right of survivorship, Joey must state in the deed that the property is being conveyed “to Kelly and Lisa as joint tenants with the right of survivorship and not as tenants in common.
The Four Unities
In order for a JTWROS to be created, the co-owners must share the “four unities”:
- Time: The property interest must be acquired by both tenants at the same time.
- Title: Both tenants must have the same title to the property in the deed; if the deed places a condition on one tenant and not the other, they do not have the same title, and the attempt to create a JTWROS is invalid.
- Interest = both tenants must have the same interest in the property, e.g., three owners each having a 1/3 interest.
- Possession means both tenants must have the right to possess the whole property; if one owner can prove that he or she has been improperly excluded from the property by the other, the JTWROS will be invalidated.
If any one of the four unities is missing, the JTWROS is invalid and becomes a tenancy in common.
Breaking A JTWROS
The co-tenant of property owned by a JTWROS can break the JTWROS’s interest in the property at any time by conveying their interest in the property to another person. Under the old common law, this required an actual exchange with a straw man—another person who would buy the property from the co-tenant for some nominal consideration, then sell it back to the co-tenant at the same low price. Many states now permit a joint tenant to break the JTWROS without a strawman, simply by executing a document to that effect, even if that owner does not inform the other owners. In either case, the JTWROS will, again, revert to a tenancy in common as to that owner’s interest in the property.
There is a big problem that is possible with the simple document execution method. In the straw man approach, there are witnesses to the transfer. With the document, there may not be witnesses. With either method, as soon as the break occurs, it works both ways. Because there may not be witnesses, the party with the document could take advantage of that fact and hide the document when the other party dies.
It is important to note, however, that if there are three or more owners and only one of the owners breaks the JTWROS, the other owners remain in the JTWROS as to each other. For example, suppose Joey, Kelly, and Lisa own a piece of property as joint tenants with right of survivorship, but then Joey conveys his share of the property to Ryan. If Ryan dies, his 1/3 share will go to his heirs. But if Kelly dies, her 1/3 share will go to Lisa because they still own their total 2/3 share in JTWROS.
Effects Of A Mortgage
Where one party takes out a mortgage on the jointly owned property, this may break the JTWROS, depending on the law of the state. Some states use a lien theory, which posits that the taking of a mortgage merely places a lien on the property, leaving the joint tenancy undisturbed. However, other states use a title theory, contending that a mortgage actually conveys title from the mortgagor [co-tenant] to the mortgagee [lender] until the mortgage is paid. In such states, the taking of a mortgage by one owner breaks the joint tenancy as to that owner.
A creditor’s judgement lien is not enough; there is no severance, If debtor dies before the creditor sues, the creditor has no interest in the property left to collect against.
Tenancy By The Entirety
Tenancy by the entirety is a type of concurrent estate available only to married couples, wherein ownership of the property is treated as though the couple are a single legal person. Like a JTWROS, the tenancy in its entirety also encompasses a right of survivorship, so if one spouse dies, the entire interest in the property passes to the surviving spouse without going through probate.
In order for a tenancy by the entirety to be created, in some jurisdictions, the party or parties seeking to create it must specify in the deed that the property is being conveyed to the couple “as tenants by the entirety”. Also, the parties must share the four unities necessary to create a joint tenancy with the right of survivorship—time, title, interest, and possession—plus a fifth unity, marriage. However, unlike a JTWROS, neither spouse in a tenancy by the entirety has the authority to end the tenancy unilaterally; instead, both spouses must agree to do so in order to undo the tenancy or transfer any part of the property to a third party. A divorce breaks the unity of marriage, leaving the default tenancy, which may be a tenancy in common. Many US jurisdictions no longer recognise tenancy in its entirety. Where it is recognised, benefits can include the ability to shield entire property from creditors of only one spouse, as well as the ability to partially shield entire property where only one spouse is filing a petition for bankruptcy relief.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 13th April, 2024.
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