Joint ownership of property is simply a case in which two or more people own the same piece of property. Co-owners do not have to be people. They might be other kinds of legal entities, e.g. partnerships or corporations. There are a number of ways in which two or more people can own property together. Many people chose to own property in some form of “concurrent” or co-ownership. There are three main ways to own property jointly:
A joint owner’s legal rights and obligations will depend on the type of co-ownership they choose. The default rule for co-ownership is tenancy in common. Assets other than real property can be co-owned, although usually tenancy by the entirety is limited to real property. In the states in which it is recognized, it is also limited to married couples.
Joint ownership of property is to be compared with sole ownership of property. Of course, if a person is the sole owner of property, their actions with respect to the property are not constrained in any way by the wishes of other owners. This is not the case with joint ownership.
What Are My Rights as a Joint Owner of Real Property?
One important difference in rights is the fact that joint tenants have a right of survivorship. This means that when one of the joint tenants passes away, their interest in the property passes to the remaining joint tenant or tenants. For this reason, many married couples choose to own their property in joint tenancy, so that when one spouse dies, the other becomes the sole owner of the property.
Joint tenants are considered to each own an undivided interest in their property as a whole. Each joint tenant owns an equal share. Only ownership of equal shares is possible under joint tenancy. If the joint tenants mutually agree to sell the property, they must equally divide the proceeds of the sale equally.
Because disagreement over the disposition of property is common, courts sometimes intervene to divide the property equally among the owners. If one joint tenant decides to convey their interest in the property to a new owner, the joint tenancy is broken and the new owner has a tenancy in common.
Tenants in common do not have the right of survivorship. If a tenant in common passes away, their interest becomes part of their estate and passes either according to their will, if they have one, or according to the laws of intestacy in the state where the property is located.
Tenants in common have the most flexibility. They can own unequal shares in the property, but each has a right to occupy and use the entire property. Any owner in a tenancy in common can freely transfer their right in the property.
One of the most important rights a co-owner has is the right to possession of the co-owned real estate. The right to possession includes the right to enter the property and to use the entire property. While a co-owner may use the entire property, the right to possession does not give a co-owner the right to occupy a particular portion of the property to the exclusion of the other co-owners.
It is important to note that possession by one co-owners is not considered adverse to the interests of another co-owner who is not in possession of the property. Therefore, in most circumstances, one co-owner’s use of the property will not create an adverse possession claim against co-owners who do not use the property. A co-owner in sole possession of the property does not owe rent to co-owners who are not in possession, except in circumstances where the co-owner in possession excludes the other co-owners from use.
Tenancy by the entirety is a type of ownership that is available for married couples only and only in some states. In some states, domestic partners can own property as tenants by the entirety. Other state statutes use the term “husband and wife,” which could exclude same-sex couples.
Neither spouse who is a tenant by the entirety can sell their share of the property or, in some states, place a lien against the property without the consent of the other spouse. Creditors cannot go after the property to satisfy a debt if only one spouse has been sued for the debt.
When one spouse passes away, the surviving spouse becomes the only owner of the property. The tenancy is then ended.
Which States Recognize Tenancy by the Entirety?
Tenants by the entirety is recognized in the following 25 states and Washington D.C.:
- District of Columbia;
- New Jersey;
- New York;
- North Carolina;
- Rhode Island;
Each state may have its own specific limitations on this form of ownership. Tenancy by the entirety can only be terminated by the death of one of the tenants, or if they both agree.
If the couple divorces, the tenancy by the entirety dissolves automatically, so to speak, because the condition for its continuation, i.e. marriage of the tenants, has ended. The divorcing couple decide what happens to the property in that event.
What Are My Duties as a Joint Owner of Real Property?
One of the most important duties of a joint tenant is the duty to protect and preserve the co-owned property. Co-owners are obligated to preserve and protect the property as it exists when possession begins. If one co-owner pays expenses that are necessary to preserve the property, the other co-owners must reimburse them in proportion to their ownership interest. An example of a necessary expense would be to repair it after it is damaged by a natural disaster.
However, if a co-owner expends money to develop the property for a use it did not have at the time possession by the co-owners began, these expenditures are usually not considered necessary and the co-owner would not have a right to reimbursement.
Co-owners in joint tenancy and tenancy in common are free to extract minerals and other resources from the property without the consent of the other co-owners, but a co-owner who does this must pay the other co-owners their proportionate value of the minerals extracted. This includes oil, gas and timber.
A co-owner who spends money and incurs costs extracting resources without the consent of the other co-tenants has no right to be reimbursed for these expenses, but must still reimburse the other co-owners for the proportionate value of the minerals extracted. Each co-owner is also entitled to their proportionate shares of other rents received from third parties for the use of the property.
Can a Co-owner of Real Property Rent Without the Other’s Permission?
One co-owner cannot exclude another co-owner from any part of a co-owned property. So, one tenant in common or joint tenant could rent their interest to another person, but the lessee would not be able to claim any part of the leased property as theirs exclusively to occupy. It would be difficult to imagine a situation in which a person would want to rent an interest in residential real property without a right to inhabit some portion of it exclusively. Of course, if the joint tenants or tenants in common were to agree to renting a part of the property for the exclusive use of a lessee, then it could be done.
Also, an interest in a co-owned property might be leased for a purpose other than to serve as habitation, e.g. for economic exploitation of some kind, e.g. farming. In this case, the co-owner who has leased their interest would have to reimburse the other co-owner for their proportionate interest in the asset, or their share of the proceeds from the lease.
The question of the right of one co-owner to lease a co-owned property could become complicated; it would be best to consult an experienced property lawyer and other co-owners before entering into a lease agreement regarding co-owned property.
What Happens if there are Joint Real Property Ownership Disputes?
The best way to deal with disputes is to avoid them. People who are thinking about co-owning property would be well advised to consider how decisions will be made and how disputes will be resolved, whether any of them will have rights of first refusal, what will happen if one of them does not pay their share of legitimate expenses and the like. Then they can draft an enforceable contract to provide for disputes.
It could help to consult an experienced real property lawyer for help in identifying issues that can come up and providing sensible ways to resolve them when they do. The lawyer can document the agreement in writing.
If a written agreement that provides for resolution of disputes is not available, disputes among co-owners may be settled through one owner buying out the others. Or they could all agree to sell the property and divide the proceeds as provided by law.
If co-owners cannot resolve a dispute, the parties can apply to a court to determine the parties’ rights and obligations. In a co-ownership situation, this is done through a partition action, which is a lawsuit in which a co-owner asks a court to divide the property or the proceeds from sale of the property. Two different types of division are possible:
- Physically dividing the property between the co-owners; or
- Ordering the property sold and dividing the proceeds between the co-owners.
Of course, if the co-owners are married and decide to get divorced, the family law courts will decide the property issues as part of the divorce.
Do I Need a Lawyer to Help Me with My Joint Ownership Problem?
As you can see, an experienced property lawyer can be of great help. They can help when the property is purchased, advising the buyers about whether a form of common ownership is appropriate and if so, which one best suits the needs of the buyers. They can help draft a useful co-ownership agreement, which might help the co-owners avoid problems in the future. And if co-owners are having trouble resolving a dispute, a lawyer can help resolve it and offer options for going forward.
Co-ownership, especially between people who are not married, can get complicated. Therefore, an real estate lawyer will be the best source of advice for your specific situation. A qualified lawyer may address such issues as formation, termination, co-tenants’ obligations towards each other, as well as disputes among them.