JOINT TENANCY EXPLAINED: WHAT IT IS AND HOW IT WORKS?
Buying Real Estate isn’t as simple as just getting the keys and moving in. There are many legal agreements to think about when you purchase a property, one of which is called joint tenancy. Understanding what joint tenancy means and how it works can be the difference between making a sound investment that pays off, and putting your finances at risk.
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In this blog post, we’ll provide an overview of joint tenancy, what circumstances might cause you to consider it when buying real estate, and some key points to consider before signing on the dotted line. We hope this will give you greater clarity on why it’s important, and help inform any decisions you make in regard to real estate investments going forward.
WHAT IS JOINT TENANCY AND WHAT ARE THE BENEFITS OF IT?
Joint tenancy is a form of co-ownership in which two or more people own a property together. In a joint tenancy, each co-owner has an equal ownership share, and the right to use and possess the entire property.
Joint tenancy is a form of home ownership that is especially attractive to couples, roommates, and families. It provides many benefits due to its structure, under which each tenant owns an equal share of the property, and all tenants must agree upon any decisions regarding the property.
When the joint tenancy is chosen, it ensures that if one of the owners passes away, their share automatically transfers over to the other owners listed on the title. Defining this at the outset means that there is less likely to be any disagreements among surviving co-owners, as the deceased person’s share passes to the co-owners through a process known as the “right of survivorship.”
One of the main benefits of joint tenancy is that it allows co-owners to avoid the time and expense of probate, which is the legal process of transferring ownership of a deceased person’s property. In a joint tenancy, the right of survivorship means that the surviving co-owners can take immediate possession of the property without the need for probate court proceedings. This can save time and money, and also allows the surviving co-owners to retain control over the property without interference from the courts.
Another benefit of joint tenancy is that it allows co-owners to plan for the future disposition of their property. For example, if two siblings own a property as joint tenants, they can be confident that the surviving sibling will automatically inherit the deceased sibling’s share of the property. This can provide peace of mind and help co-owners avoid potential disputes over ownership after one of them dies.
WHAT ARE THE RISKS OF JOINT TENANCY
While joint tenancy has many benefits, it comes with risks and drawbacks that are worth considering:
One risk is that if a co-owner incurs debt or becomes involved in legal trouble, the property may be at risk of being seized to satisfy those debts or judgments. This can be a particular concern if one co-owner has poor credit or is prone to financial problems.
Another risk is that a co-owner may not be able to sell or mortgage their share of the property without the consent of the other co-owners. This can be inconvenient if one co-owner wants to sell their share but the other co-owners do not. It can also be difficult to determine the value of each co-owner’s share if the property is sold, which can lead to disputes over the distribution of proceeds.
HOW DOES JOINT TENANCY WORK IN TERMS OF PROPERTY RIGHTS AND RESPONSIBILITIES?
Joint tenancy is an ownership structure that comes with a whole host of rights and responsibilities. Under joint tenancy, each owner has an undivided interest in the whole property. This means that each owner has an equal right to use and possess the entire property. The upside of this provision is that no one owner can evict another owner without the consent of all owners. However, along with rights come responsibilities: each co-owner has an equal responsibility to contribute to the expenses and maintenance of the property.
Joint tenancy can be created by a written agreement, such as a deed or a will, or it can be implied by the way the property is held. In order to create a joint tenancy, the owners must have the same interests in the property and take possession of the property at the same time.
Joint tenancy can be terminated by one of the owners transferring their interest in the property to another person or entity, or by the owners agreeing to divide the property among themselves. It can also be terminated by a court order, such as in the case of divorce or other legal proceedings
Joint tenancy may sound complicated on paper, but when understood properly, it can be a great tool for protecting your assets.
CAN A TENANT SELL THEIR SHARE OF THE PROPERTY TO ANOTHER PARTY?
As a joint tenant, an owner has the right to use and possess the entire property, but they do not have the right to sell their individual share of the property to another party without the consent of the other owners. This is because the right of survivorship means that the ownership interest of a joint tenant is automatically transferred to the surviving owners upon their death, rather than being transferred to another party through a sale, or passed on to an heir.
However, a joint tenant can transfer their interest in the property if the transfer is ordered by a court. In order for the transfer to be effective, it must be done through a formal legal process, such as by executing a deed or going through a court-ordered division of the property.
HOW CAN YOU SET UP JOINT TENANCY IF YOU ARE BUYING A PROPERTY WITH SOMEONE ELSE?
Buying a property with someone else can be an exciting venture, but it is important to make sure that you both have the same rights and obligations as co-owners. Setting up the joint tenancy for the property helps to do this by giving each owner an equal stake in the property and its assets.
To set up the joint tenancy, first, speak to your lawyer or accountant so they can ensure all paperwork is correctly filled out and correctly registered with your local land registry. Then, make sure that both parties agree on how the expenses will be divided, such as repairs, maintenance fees, and mortgage payments. Once everything is in order, you can officially begin joint ownership of your property!
THE BOTTOM LINE
So, there you have it! Everything you need to know about joint tenancy is explained. Now that you understand the basics of how joint tenancy works and what the benefits and drawbacks are, you can make an informed decision about whether this type of investment is right for you. If you’re thinking about purchasing a property with someone else, we hope this article has helped shed some light on what’s involved in setting up the joint tenancy.
