Tenancy in common is another type of concurrent ownership (estate) through which two owners can own a property at the same time. Through this tenancy, there is no ‘right of survivorship’ involved. This type of tenancy is mostly common among two business partners who are not married, or related (even though sometimes that can be the case). The two owners in a tenancy in common, are usually referred to as ‘tenants in common.’
In a tenancy in common, the property remains undivided. This means that both people involved will have full access to the entire property while each owns a part of it. The two most common areas where a person can see a tenancy in common is in real estate and within joint bank accounts. The main difference between a tenancy in common over a joint tenancy is that when one of the owners is deceased, they can determine (by a predetermined will or document) how to distribute the property.
Unlike a joint tenancy, where the property is automatically given to the surviving owner, in this tenancy, the property can be dispersed to another owner(s) or sold and the assets distributed to who was named in the will or document. Also, in a tenancy in common, both parties are entitled to the use of that property equally even if the interest put into that property wasn’t the same.
When two or more people want to share ownership of a piece of property for any reason, but don’t hold a relationship where they would want the property to be handed over to the other holder/holders in case of his or her death, they commit to a tenancy in common. This is mostly seen among friends, business partners, or in the case of a boyfriend and girlfriend prior to marriage. This entitles each person to have their individual part, and also control what they do with it at the time of their death.
Speaking in the case of a real estate property, two people can purchase a home and rent it out as a form of added income. They own the property as tenants in common and can collect the rent, and split the payments in half evenly. Should they choose to mutually sell the property, then the property can be sold and the profits made will be evenly split in half and given to each owner (pending the amount they put into the property). Tenancy in common is a way to share a property with someone but not devote the entire property to that person in case of death, and for people that don’t have serious or intimate relationships, or relation to the other person. It is an effective way to invest in property with someone for profit, when one alone doesn’t have the interest alone to do so.