Tenants in common is an arrangement that comes into play when multiple people decide to purchase property together, whether it be a primary residence or a vacation home. Tenants in common allow people to own property together with different percentages of the same property. For example, one owner may have put in more money to purchase the property and in return has a higher percentage of ownership. The agreement between the tenants in common provides a legal framework for the buyers to structure how to operate the property, including how to split costs to deciding who makes the major decisions regarding the property. The mortgage, taxes, insurance, and maintenance costs may vary depending on the share of ownership, even though everyone will own a share of the property and have rights to live in and use the property.
Advantages of Tenants in Common Purchase
There can be a financial advantage to purchasing property as tenants in common. This is especially true for those who cannot afford to buy property on their own. Bringing in any number of people together helps to split costs. A tenants-in-common agreement is flexible, which is advantageous to people who may plan to use the home for part-time. This allows them to have a smaller share in the property. This type of agreement also allows individual owners to decide how to distribute their share of property if they die. They can either sell their ownership share or pass it on to someone else.
Disadvantages of Tenants in Common Agreement
A tenants-in-common agreement can be disadvantageous. An owner can sell or give their share of the property away without the consent of the other owners. This may result in owning property, and in some instances living there, with someone that you don’t know or like. To ensure that things run smoothly, it is important to have everything in writing. If you decide this is ideal for you, contact our office to walk you through the legal process.