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Residential or commercial property can be owned separately (sole ownership) or jointly (joint or common ownership). In many cases, joint owners can be either co-tenants in common or joint tenants with the right of survivorship.

You can own residential or commercial property individually (sole ownership) or collectively (joint or typical ownership). For the most part, there are 2 ways to hold title with others. Joint owners can be among either:

- Co-tenants in typical
- Joint tenants with the right of survivorship

The main differences between these joint ownership types are:

- How they arise
- How they are damaged
- How the subject residential or commercial property can be divided and sold

Continue reading to check out these differences in greater information.

What Is a Concentrated Interest?

Before talking about particular types of joint ownership, it's valuable to unload the legal meaning of an undivided interest. When 2 or more individuals own property, each private owns a share (interest) of the entire residential or commercial property.

Each owner's interest is stated to be concentrated. Each owner has a right to utilize the whole physical residential or commercial property even though their abstract right to the residential or commercial property is portioned out amongst them.

To show briefly, picture that two company partners own real residential or commercial property together. A warehouse, perhaps. The warehouse is physically undivided, however the owners share the entire physical residential or commercial property as a whole. However, each partner might have a 50% interest, or one might have a 30% interest, and another has a 70% interest.

Each kind of joint residential or commercial property ownership has certain limitations on how to divide the residential or commercial property interest.

An occupancy in typical may involve 2 or more owners. Each tenant in common might own an equivalent share of the residential or commercial property, but there's no requirement for equal ownership. Four owners may each own a 25% interest, or their interests might break down as 10%, 20%, 30%, and 40%. Each co-tenant has an equivalent right to have, use, and delight in the residential or commercial property. The co-tenants are free to make alternative arrangements among themselves.

Each co-tenant may also easily sell their interest. Similarly, when a co-owner of the residential or commercial property passes away, their share remains part of the decedent's estate. Thus, the decedent's individual agent can transfer the decedent's share as discussed in their will. Whoever receives the interest actions into the previous co-tenant's shoes.

Further, the transfer of a co-tenant's interest may take place at any time. The owner modification does not disrupt the other co-tenant's ownership status. Jointly owned residential or commercial property is presumed to be held in an occupancy in typical unless the residential or commercial property deed defines otherwise.

A joint tenancy with right of survivorship (JTWROS), like an occupancy in typical, is a kind of co-ownership. It may involve 2 or more owners. However, a JTWROS must adhere to a number of constraints.

The Four Unities

A JTWROS must satisfy the so-called Four Unities. They are as follows:

Unity of Time: Each joint renter needs to take title of their share at the exact time.
Unity of Title: Each joint renter must take ownership of their share through the exact same instrument (e.g., a residential or commercial property deed). The legal file should particularly mention that it is developing a JTWROS. Otherwise, the document creates a tenancy in common by default. The specific formation language differs by state.
Unity of Interest: Each joint renter must have an equal interest. Two owners must each have a 50% interest. Four should each have a 25% interest, and so on.
Unity of Possession: Each joint tenant needs to have a legal right to have, utilize, and delight in the residential or commercial property equally. Unlike co-tenants in an occupancy in common, joint tenants can not modify this plan.

Violation of any of the Four Unities damages the joint tenancy. The joint occupancy would become an occupancy in common. In specific, note that the Unity of Time and Unity of Title operate so the joint occupants can not transfer their share without damaging the joint occupancy. Their ownership rights can not be offered, inherited, or otherwise transferred.

Right of Survivorship

If one of 2 owners of residential or commercial property held in a JTWROS passes away, ownership instantly transfers to the enduring owner. This is called a right of survivorship. The deceased owner's estate does not get any share of the residential or commercial property. Unlike an occupancy in common, a JTWROS co-owner can not move their interest in the residential or commercial property without destroying the JTWROS.

Does Either Avoid Probate?

Probate has 2 meanings. It refers to the legal procedure of inspecting whether a departed individual's last will and testament is valid and genuine. This occurs in court of probate. Probate likewise describes the basic process of distributing a decedent's estate.

Depending on the estate's size, the probate process can be lengthy and expensive. So, does an occupancy in common or JTWROS prevent probate?

Tenancy in Common

Typically, an occupancy in typical will not avoid probate. A co-tenant's ownership interest remains part of their estate when they pass away. It needs to be distributed by will or according to state laws of intestate succession.

If you desire to keep the piece of residential or commercial property out of the probate process, you might move it out of an occupancy in common and into a trust. Residential or commercial property in a trust does not belong to the individual who supplies the residential or commercial property. Instead, the residential or commercial property comes from the trust itself and, for that reason, is not part of the person's estate at the time of death.

Joint Tenancy with Right of Survivorship

By contrast, the ROS in a JTWROS typically guarantees that a joint occupant's interest does avoid probate. When only one joint occupant remains, that private becomes the sole owner.

At the sole owner's death, their 100% share need to be distributed as part of their estate. Thus, the making it through owner does not avoid probate. Again, this can be prevented by transferring the interest into a trust.

By extension, one can think of a conceivable though unlikely circumstance in which all joint renters pass away at or near the same time (e.g., in an aircraft crash), making it impossible to identify who was the last making it through joint renter. In this case, each joint renter's share might put into their estates and fail to prevent probate.

Questions? A Regional Attorney Can Help

Tenancies in common have the benefit of versatility. Joint tenancies with right of survivorship have the advantage of permanence. Understanding the advantages and downsides of each ownership plan before entering one can assist you prevent severe headaches. A local property or estate planning attorney can supply important legal advice concerning joint tenancy and which type would be best for you.