Browse Proptionary encyclopedia

Build your real estate vocabulary to be able to communicate and invest more effectively and professionally.

Tenancy in Common


Tenancy in common refers to when a property is owned by more than one person at once.


With a tenancy in common any one of the owners of the property can pass their share along to whomever they like at the time of their death. This is different from a joint tenancy. In a joint tenancy, two or more people or parties can co-own a property, but when one of them passes away, the property goes to the surviving owners, and without the lengthy probate process.

With a tenancy in common, the property owner gets to choose their beneficiary, and the property is equally owned by every owner. This means that it can’t be divided in unusual ways, say one owner is entitled to acres in the north, while the other gets the right wing of a house etc. That said, in a tenancy in common, owners can divide property through percentages, or interests. So for instance, Sam might own 60% of the property, while Sara and Jacob both own 20%. A new owner could join the agreement at any time as well, even years after the agreement is established.

With a joint tenancy, co-owners can’t make amendments down the line. Joint tenants have to have equal shares of a property, and they have to join the agreement at the same time. The rules for the joint tenancy are outlined in detail in the contracts, and tends to be the type of contract employed by married couples. A joint tenancy can be broken if one of the owners decides to sell their share, or interest, of the property. An example of a situation like might be one of the owner deciding to buy the other owners out of their shares. If the owner was selling the property, profits from the sale would be equally owed and the passed on to the other owners.


With a tenancy in common, what happens to the property will depend on the terms of the contract that was signed at the time. Co-owners of a tenancy in common won’t have any rights to the property if of them dies. These rights are referred to as rights of survivorship. The only want that the deceased person’s portion of the property would go to the other owners is if that preference was stipulated in the will. Otherwise, the deceased owner’s property belongs to his or her estate. With a joint tenancy, the property share would go directly to the surviving tenants. So, if three tenants own a building together, and one gets sick and passes away, then the remaining two get one-half of the property.

Taxes and Contracts

In terms of taxes, a tenancy in common works a little differently in that all of the owners will receive one bill. The bill is sent in such a manner because a tenancy in common doesn’t actually divide the property in terms of the law. This can vary depending on the jurisdiction, but in most cases, co-owners will receive one bill. Tax details are generally outlined in the tenancy-in-common agreement. The agreement will outline the specifics as to how each owner is responsible for his or her share of taxes, or tax liability.

It’s not uncommon for a tenancy in common agreement to also include provisions relating to ‘joint and several liability’. This means that if something happens to the property all of the owners are equally responsible for it. This also applies to any actions or events, which means that someone is harmed by the action of one of the owner, the other may be held liable as well. For instance, if someone ends up seeking damages, that means that the other tenants in common might have to make fiscal contribution to pay off the award.

If this happens, it means that each owner is allowed a tax deduction on the amount of damage reward he or she contributed. If joint and several liability isn’t included in the property ownership agreement, then the owners can only include an amount that represents the percentage of the property they paid, even if it’s less than what they actually paid.


Some of the drawbacks of entering into a tenancy in common include the fact that if one of the owners can’t make payments on the property, the other owners have to cover that persons’ share. Also, if there’s a sudden death, and the deceased owner didn’t think to set up a will, then his or her share of the property has to go through the lengthy process of probate, which is when a will has to be reviewed by a court-appointed administrator to make sure that it’s authentic. The administrator is then responsible for covering outstanding debt. This can put the other owners in a difficult situation because the lenders will still need to receive mortgage payments. Also, there’s a chance that the remaining owners could end up owning the property with a stranger. Another drawback is that one of the co-tenants is able to apply for a partition action, which means that the other tenants might have to sell their shares of the property against their will.


With a tenancy in common, it’s easier to get approved for a loan for property purchase, because more than one person is applying there are multiple incomes to guarantee repayment. Also, the expense is lowered because the cost is split among buyers. There’s also an advantage as to borrowing capacity, due to multiple incomes. If one owner has a higher pay rate and is able to pay a higher percentage, then a potential owner with a lower income can a lower percentage and still be invested in the property. Also in tenancy in common an owner can choose to use a will to pass along property to an heir.