Tenants in common and joint tenants are two distinctly different ways to hold title to real estate. Although both types of ownership necessarily involve two or more persons, the degree of ownership of the property and the disposition of the real estate upon the death of one owner are the key differences between tenants in common and joint tenants.
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Statutory Authority for Tenants in Common and Joint Tenants
Under A.R.S. §33-431, “all grants and devises of real property made to two or more persons create estates in common and not in joint tenancy, except grants or devises in trust, or to executors, or to husband and wife.” Furthermore, “A grant or devise to two or more persons may by express words vest the estate in the survivor on the death of a grantee or devisee when expressly declared in the grant, transfer or devise to be a joint tenancy with right of survivorship. An estate in joint tenancy with right of survivorship may also be created by grant or transfer from a sole owner to himself and others, or from two or more owners to themselves or to one or more of them and others.” As this statute illustrates, the transfer of property to two or more persons defaults to tenants in common as the type of ownership, with a few exceptions, such as when the property is conveyed to a husband and wife. A grant or devise of property to two or more persons must contain specific and express language to establish their ownership as joint tenants with rights of survivorship rather than tenants in common.
Tenants in Common
An unlimited number of people can hold title to real estate as tenants in common, although the minimum number of owners is two. The individual owners need not be married to hold real estate as tenants in common. Each owner or tenant in common holds an undivided fractional share in the property, and the shares can be proportionate or disproportionate.
Due to the nature of holding a share of the property as a tenant in common, an owner can transfer or devise the share to a third party without the consent of the other owners. The owner can also mortgage the share or otherwise encumber it. Each owner has its own tax basis.
Each tenant in common is entitled to possession of the property. Furthermore, a tenant in common cannot collect rent from another tenant in common, even if that tenant in common has exclusive possession of the property, absent a rental agreement or ouster of the tenant seeking rent.
Finally, if a tenant in common passes away, his share of the property passes to his heirs, either according to the terms of a will or trust or, absent a valid estate planning document, through the laws of intestate succession. In that case, the tenant in common’s share of the property will pass to his surviving relatives in the order designated by state law. Therefore, probate proceedings will be necessary to transfer the title of the deceased tenant’s share of the property.
Joint Tenants
Like tenants in common, an unlimited number of people can hold title to real estate as joint tenants as long as at least two joint tenants exist. However, in contrast to tenants in common, joint tenants hold an equal and undivided interest in the property. As a result, a joint tenant cannot sell, transfer, or encumber the property without the consent of all other joint tenants.
If one joint tenant passes away, the remaining joint tenants have a right of survivorship. In other words, the deceased joint tenant’s share of the property automatically passes to the remaining joint tenant(s) instead of passing to the joint tenant’s heirs, such as in the case of property belonging to a tenant in common. As a result, if two joint tenants own a property, and one of them passes away, then the surviving individual would assume sole ownership of the property. The joint right of survivorship in a joint tenancy allows the surviving party or parties to assume ownership of the property without needing probate proceedings to transfer ownership.
The statute cited above states that certain conditions must exist to create a joint tenancy. All joint tenants must receive their interest in the property simultaneously, in the same conveyance document, with the same right to possess the property. The parties must clearly intend to take title to the property as joint tenants, which necessitates express language in the deed or other legal documents specifically indicating that the parties are taking title to the property as joint tenants. Finally, all joint tenants must sign the legal documents to create the joint tenancy.
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Our goal is to assist you in understanding your legal rights and responsibilities depending on how you hold title to the property. When real estate disputes occur, we will advocate on your behalf. Contact the offices of Provident Law® today at (480) 388-3343 or online and schedule an appointment to speak with the best real estate attorney in Arizona about your legal matter.