Moving to the UK from USA
- May 31, 2023
‘Joint tenants’ and ‘tenants in common’ are terms used in property law to describe different types of ownership interests in real estate.
Joint tenants refer to a type of ownership where two or more individuals own an equal share of a property. When one owner dies, their share of the property automatically passes to the surviving joint owner. This is known as the right of survivorship. In other words, if one joint tenant dies, the surviving joint tenants inherit the deceased tenant’s share of the property.
‘Joint tenantss’ and ‘tenants in common’ are terms used in property law to describe different types of ownership interests in real estate.
Joint tenants refer to a type of ownership where two or more individuals own an equal share of a property. When one owner dies, their share of the property automatically passes to the surviving owner(s). This is known as the right of survivorship. In other words, if one joint tenant dies, the surviving joint tenant(s) inherit the deceased tenant’s share of the property.
When a tenant in common dies, their share of the property is distributed according to their will or according to the laws of intestacy (if they don’t have a will).
In summary, the main difference between joint tenants and tenants in common is that joint tenancy includes the right of survivorship, while tenants in common do not.
Tenancy in common (TIC) is a type of shared ownership of a property where two or more individuals own a fractional interest in the property.
Each owner has an undivided interest in the property, meaning that each owner has the right to use and occupy the entire property, regardless of the percentage of ownership. Here are some key characteristics of TIC:
A Tenancy in Common (TIC) property can be financed through a mortgage, but whether you need a tenants in common mortgage or not depends on your situation and the lender’s requirements.
If you are purchasing a TIC property with other co-owners, you can apply for a tenants in common mortgage together. This allows each co-owner to contribute their share of the down payment and mortgage payments, and share ownership of the property according to their percentage of ownership.
However, some lenders may not offer tenants in common mortgages, or they may require additional documentation or higher down payments due to the added complexity of this type of ownership structure. In some cases, co-owners may need to obtain separate mortgages for their individual shares of the property.
It’s important to note that if you are considering a TIC property, you should consult with a real estate attorney or financial advisor to fully understand the legal and financial implications of this type of property ownership structure, including mortgage financing.
Tenants in Common (TIC) allows two or more individuals to own a fractional interest in a property. The ownership percentage options for tenants in common depend on the agreement between the co-owners and can be divided in any proportion that the co-owners agree on.
Here are some common property ownership percentage options for tenants in common:
It’s important for tenants in common to agree on the ownership percentage options and document their agreement in writing to avoid disputes and misunderstandings in the future.
When a co owners dies, the ownership of the property passes automatically to the surviving joint tenant(s) through the right of survivorship. This means that the deceased joint tenant’s share of the property is transferred directly to the surviving joint tenant(s) without going through probate or being affected by the deceased joint tenant’s will.
Under Tenancy in Common (TIC), each co-owner is responsible for paying property taxes on their fractional interest in the property. This means that each co-owner’s share of the property tax is calculated based on the percentage of ownership they hold in the property.
For example, if there are two co-owners in a TIC property, one with a 60% share and the other with a 40% share, the property tax bill will be split accordingly. The co-owner with the 60% share will be responsible for paying 60% of the property tax bill, while the co-owner with the 40% share will be responsible for paying 40% of the bill.
It’s important for TIC co-owners to have a clear understanding of their respective ownership percentages and their obligations with regard to property tax payments. The co-owners may choose to make these payments directly to the tax authority or to set up an joint tenancy agreement
in which one co-owner makes the payment on behalf of all co-owners and is reimbursed by the others.
It’s also important to note that if property taxes are not paid, the local government may place a lien on the property, which can lead to foreclosure. Therefore, it’s essential for TIC co-owners to stay current on property tax payments to protect their investment in the property.
Whether it’s better to be tenants in common or joint tenants depends on your individual circumstances and goals.
Joint tenancy is often chosen by couples or family members who want to ensure that the surviving joint tenant(s) will automatically inherit the property when one of the owners dies. This is because joint tenancy includes the right of survivorship, which means that when one joint tenant dies, their share automatically passes to the surviving joint tenant(s) without going through probate.
On the other hand, tenants in common may be preferred when co-owners want more flexibility and control over their respective shares of the property. Each co-owner in a tenancy in common can sell, transfer, or mortgage their share without the consent of the other co-owners, and they can also leave their share of the property to whomever they choose in their will.
Changing the ownership structure of a property from joint tenancy to tenancy in common requires a legal process that typically involves the following steps:
1. Discuss the change with the other joint tenant(s): If you are currently a joint tenant and want to switch to tenancy in common, you will need to discuss this with the other joint tenant(s) and obtain their consent.
2. Consult with an attorney: It’s recommended to consult with an experienced real estate attorney who can advise you on the legal and tax implications of changing ownership structure, and help you draft and file the necessary legal documents.
3. Prepare a new deed: The new deed will transfer ownership from joint tenancy to tenancy in common. The deed must include the names and ownership percentages of each tenant in common.
4. File the new deed with the county recorder’s office: The new deed must be filed with the county recorder’s office in the county where the property is located.
5. Notify relevant parties: Notify your mortgage lender, insurance company, and any other relevant parties of the change in ownership structure.
6. Update your estate plan: If you have an estate plan that includes your property, you will need to update it to reflect the new ownership structure.
It’s important to note that changing ownership structure can have legal and tax implications, so it’s recommended to consult with an attorney and/or tax professional before making any changes.
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