When two or more people are purchasing an investment property together, there are different options of holding title (the legal ownership rights to a home), which can be confusing. We have broken down the difference between two common options: Joint Tenancy and Tenancy in Common (TIC) and included some pros and cons of each.
What it is: when two or more people own a property together with equal rights and obligations until one owner dies (also called right of survivorship). To form a joint tenancy, there must be a unity of time, title, and interest, meaning all joint tenants must take title and deed at the same time.
Pros: Right of survivorship, equal responsibility of all parties, tax benefits
Cons: No inheritance rights (if one partner dies, rights go to the next partner), equal liability for maintenance, repairs and finances
Tenancy in Common (TIC)
What it is: when several owners each own a stated portion or share of the entire property that they can sell. Unlike joint tenancy, in a TIC, each owner can own a different percentage, can take title at any time, and can sell their share at any time. Additionally, when one owner dies, his portion goes to his estate.
Pros: Flexibility of shares and financial responsibilities based on income, ability to pass on your share to your heirs
Cons: Reliance on other parties to pay their parts, process of probate when one owner dies
Clearly both of these methods of holding title have their pros and cons, so we always recommend consulting your counsel for these kinds of decisions. To learn more about title, see the “Title” section of our blog. For more investor resources, see our Resources Page.