When it comes to property ownership, two common terms often surface: joint tenants and tenants in common. While both arrangements involve shared property ownership, they differ significantly in their legal implications.
Joint tenants
Joint tenants, as the name suggests, implies a joint and equal ownership of the property. In this scenario, each party has an undivided interest. One key feature of joint tenancy is the right of survivorship; in the unfortunate event of one owner’s passing, their share automatically transfers to the surviving joint tenant(s), bypassing the probate process.
Tenants in common
On the other hand, tenants in common enjoy shared ownership but with more flexibility. Unlike joint tenancy, tenants in common can have unequal ownership interests and each owner can sell or transfer their share independently. Additionally, in the case of a tenant in common’s demise, their share does not automatically pass to the other owners; instead, it becomes part of their estate and is subject to inheritance laws.
Declaration of trust
A crucial document that often accompanies these arrangements is the declaration of trust. This legal instrument outlines the specifics of the co-ownership, such as the percentage of ownership for each party, their rights and responsibilities, and any special conditions. The declaration of trust acts as a safeguard, reducing the likelihood of disputes and ensuring a clear understanding among co-owners. You can read more about a declaration of trust here.
In conclusion, the choice between joint tenants and tenants in common depends on the nature of the relationship between the property owners and their preferences for property management and inheritance. Whichever option is chosen, a carefully drafted declaration of trust is vital to clarify the terms and conditions of co-ownership, providing a solid foundation for a harmonious property arrangement.