Differences Between Joint Tenants With Survivorship and Tenants in Common

You can own property individually (sole ownership) or collectively (joint or common ownership). In most cases, there are two ways to hold title with others. Joint owners can be one of either:

• Co-tenants in common
• Joint tenants with the right of survivorship

The main differences between these joint ownership types are:

• How they arise
• How they are destroyed
• How the subject property can be divided and sold

Read on to explore these differences in greater detail.

What Is an Undivided Interest?

Before discussing specific forms of joint ownership, it's helpful to unpack the legal meaning of an undivided interest. When two or more people own real estate, each individual owns a share (interest) of the entire property.

Each owner's interest is said to be undivided. Each owner has a right to use the entire physical property even though their abstract right to the property is portioned out among them.

To illustrate briefly, imagine that two business partners own real property together. A warehouse, perhaps. The warehouse is physically undivided, but the owners share the entire physical property as a whole. However, each partner may have a 50% interest, or one may have a 30% interest, and another has a 70% interest.

Each type of joint property ownership has certain restrictions on how to divide the property interest.

Tenancy in Common

A tenancy in common may involve two or more owners. Each tenant in common may own an equal share of the property, but there's no requirement for equal ownership. Four owners may each own a 25% interest, or their interests may break down as 10%, 20%, 30%, and 40%. Each co-tenant has an equal right to possess, use, and enjoy the property. The co-tenants are free to make alternative arrangements among themselves.

Each co-tenant may also freely sell their interest. Similarly, when a co-owner of the property dies, their share remains part of the decedent's estate. Thus, the decedent's personal representative can transfer the decedent's share as explained in their will. Whoever receives the interest steps into the previous co-tenant's shoes.

Further, the transfer of a co-tenant's interest may occur at any time. The owner change does not disturb the other co-tenant's ownership status. Jointly owned property is presumed to be held in a tenancy in common unless the property deed specifies otherwise.

Joint Tenancy with Right of Survivorship

A joint tenancy with right of survivorship (JTWROS), like a tenancy in common, is a form of co-ownership. It may involve two or more owners. However, a JTWROS must comply with a number of restrictions.

The Four Unities

A JTWROS must satisfy the so-called Four Unities. They are as follows:

• Unity of Time: Each joint tenant must take title of their share at the exact time.
• Unity of Title: Each joint tenant must take ownership of their share through the same instrument (e.g., a property deed). The legal document must specifically state that it is creating a JTWROS. Otherwise, the document creates a tenancy in common by default. The specific formation language varies by state.
• Unity of Interest: Each joint tenant must have an equal interest. Two owners must each have a 50% interest. Four must each have a 25% interest, and so on.
• Unity of Possession: Each joint tenant must have a legal right to possess, use, and enjoy the property equally. Unlike co-tenants in a tenancy in common, joint tenants cannot alter this arrangement.

Violation of any of the Four Unities destroys the joint tenancy. The joint tenancy would become a tenancy in common. In particular, note that the Unity of Time and Unity of Title operate so the joint tenants cannot transfer their share without destroying the joint tenancy. Their ownership rights cannot be sold, inherited, or otherwise transferred.

Right of Survivorship

If one of two owners of property held in a JTWROS dies, ownership automatically transfers to the surviving owner. This is called a right of survivorship. The deceased owner's estate does not receive any share of the property. Unlike a tenancy in common, a JTWROS co-owner cannot transfer their interest in the property without destroying the JTWROS.

Does Either Avoid Probate?

Probate has two meanings. It refers to the legal process of checking whether a deceased person's last will and testament is valid and authentic. This occurs in probate court. Probate also refers to the general process of distributing a decedent's estate.

Depending on the estate's size, the probate process can be time-consuming and expensive. So, does a tenancy in common or JTWROS avoid probate?

Tenancy in Common

Typically, a tenancy in common will not avoid probate. A co-tenant's ownership interest remains part of their estate when they die. It must be distributed by will or according to state laws of intestate succession.

If you want to keep the piece of property out of the probate process, you could transfer it out of a tenancy in common and into a trust. Property in a trust does not belong to the person who supplies the property. Instead, the property belongs to the trust itself and, therefore, is not part of the person's estate at the time of death.

Joint Tenancy with Right of Survivorship

By contrast, the ROS in a JTWROS typically ensures that a joint tenant's interest does avoid probate. When only one joint tenant remains, that individual becomes the sole owner.

At the sole owner's death, their 100% share must be distributed as part of their estate. Thus, the surviving owner does not avoid probate. Again, this can be avoided by transferring the interest into a trust.

By extension, one can imagine a conceivable though improbable scenario in which all joint tenants die at or near the same time (e.g., in a plane crash), making it impossible to determine who was the last surviving joint tenant. In this case, each joint tenant's share might pour into their estates and fail to avoid probate.

Questions? A Local Attorney Can Help

Tenancies in common have the advantage of flexibility. Joint tenancies with right of survivorship have the advantage of permanence. Understanding the advantages and disadvantages of each ownership arrangement before entering one can help you avoid serious headaches. A local real estate or estate planning attorney can provide valuable legal advice regarding joint tenancy and which type would be best for you.