By: Emanuelle Welter
If you have considered buying real estate with someone else a Joint Tenancy might be right for you, but before making a decision there are a couple things to consider.
Keep on reading to learn more!
- What Is A Joint Tenancy?
Joint tenancy is a legal term for an arrangement in which defines the ownership interests among two or more co-owners of real property. In a joint tenancy all parties share equal rights and obligations for the real-estate purchased. While joint tenancy can apply to personal property, business ownership, bank and brokerage accounts, it’s most used for real estate investments.
- How Does It Work?
In a joint tenancy any tenant can access any part of the property at any time without restrictions. All tenants can access the property either together or alone.
- Limitations
The most critical condition of this type of joint ownership is that it includes the right of survivorship (a legal principle that allows the ownership of a property or asset to automatically transfer to the surviving owners when one owner dies), which prevents co-tenants from inheriting their shares of the property
- Ownership Rights
Property ownership rights are widely thought of as: either you own it or you don’t. But in reality it can take many forms, depending on what rights a person owns. There are a variety of legally recognized co-ownership arrangements, like tenancy by entirety and tenancy in common. Joint tenancy is by far the most common, because most people who purchase homes together are married, have a partnership or are related and wish to pass their property to their joint tenant.
- How Is The Agreement Settled?
Your real estate attorney can craft a co-ownership agreement that is in the best position to make sure that you’re buying exactly what you think you’re buying. This document can look different depending on your state’s jurisdiction so it is important to make sure it is within the rules established.
- What Are The Pros Of A Joint Tenancy?
Home affordability: a joint tenancy can make homeownership more affordable and provide an advantage when it comes to qualifying for a mortgage.
Equal protections: a joint tenancy ensures all parties that the responsibilities for paying debts are shared therefore incentivizing all to do their part to protect their investment.
Ability to avoid probate court: Instead of going through the probate process (a process used by the court system to validate one’s will), the surviving co-owners have immediate access to their share regardless if a will has been written out.
- What Are The Cons?
Added responsibility: if a co-owner runs into financial difficulties the other parties are still responsible for any payments necessary.
Potential relationship strains: it can be challenging coming to an agreement over a property if the parties have a disagreement since all decisions must be made jointly.
It is crucial to consider all options carefully as well as consult your attorney before making decisions.
