What Is Tenants in Common?

Tenants in common (TIC) is an arrangement that allows two or more individuals to jointly own property. This arrangement differs from a joint tenancy in that it allows for an unequal division of rights among the individuals, such as the right to share in profits or the right to sell their portion of the property.

Advantages of Tenants in Common vs. Joint Tenancy

Tenants in common has several advantages when compared to joint tenancy. In a joint tenancy, if one of the tenants passes away their share of the property is transferred to the surviving tenants. This can cause a number of problems for surviving tenants, ranging from complications in dividing profits, to a lack of resources to maintain the property. With the tenants in common structure, each tenant maintains their share in the property regardless of any changes in life events.

Another area where tenants in common have an advantage is in the area of estate planning. If a tenancy in common is properly drawn up a tenant can determine how their share of the property is passed on after they are gone. This allows the deceased tenant to ensure that their share of the property is distributed in the ways they deem best, and also shields the surviving tenants from potential disputes with outside parties.

How to Set Up Tenants in Common

When establishing a tenant in common structure, the owners must clearly define the rights and obligations of each individual involved. This should include the ratio of profit or loss that each individual is entitled to, as well as the rights and responsibilities of each tenant when it comes to repairs, maintenance, and upkeep of the property.

Both tenants and non-tenants can own a share in a tenancy in common, however, it’s important to note that each share must be legally defined and recorded in order to protect the rights of each individual. Additionally, the property must be properly documented and recorded with local and state authorities in order to ensure that the rights of the tenants are secured.

Conclusion

Tenants in common is a great option for those looking to jointly own property or an investment. While the set-up process can be a bit complicated, the legal definition of rights and obligations of each tenant will ensure that all parties involved feel protected. With a proper setup, tenants in common can provide peace of mind and a sense of security to all owners and should be considered whenever more than two individuals are looking to purchase a jointly owned asset.