Tenants in common contribute to the cost of standard property expenses and necessary repairs. They pay a portion that is proportional to their share in the property. If one of the tenants in common fails to keep current with their portion of expenses, the violating party may lose their share in the property. Tenants are not obligated to pay for elective repairs or improvements to the property.
Any matters that affect all tenants in common must be approved by all tenants. This includes making elective repairs or improvements to the property, renting the property to a third party, or deciding to sell the property. Rental income derived from units being rented are split equally. Furthermore, all tenants in common have the right to request accounting paperwork.
Tenants in common have the right to sell or transfer their portion of ownership to a third party. The other tenants in common do not have the legal right to prevent one tenant from doing so. In the event of a tenant in common’s death, his or her share in a property is transferred to an heir through a will or to the state if the tenant has no will.
Problems with a Tenancy in Common
Typically, lenders do not provide financing to tenants in common. In the event that a tenant in common defaults on a debt, a lender would only be able to foreclose on the defaulting tenant’s share in the property, not the property as a whole. Therefore, a tenancy in common is not a smart investment strategy for lenders.
Two Main Ways Tenants Can Terminate a Tenancy in Common
all tenants agree to terminate the tenancy in common