Tenancy in common is a form of joint ownership in real estate where two or more individuals hold an undivided interest in the property. It allows co-owners to possess distinct shares of the property, which can be equal or unequal. While this arrangement offers flexibility and convenience, it is essential to understand what happens when one tenant in common passes away. This article delves into the implications and legalities surrounding tenancy in common upon death.
Definition and Characteristics of Tenancy in Common
Tenancy in common is a popular method of property ownership, particularly for relatives, business partners, or friends. Its key features include:
a) Undivided Interest: Each tenant in common possesses an undivided share of the property, giving them the right to occupy and use any portion of it.
b) Separate Ownership: Unlike joint tenancy or tenancy by the entirety, tenants in common have individual ownership rights and can transfer or sell their share independently.
Survivorship Rights in Tenancy in Common
Unlike joint tenancy, where the right of survivorship applies, tenancy in common does not provide automatic transfer of a deceased owner’s interest to the surviving owners. Instead, the ownership interest of the deceased tenant passes according to their will or applicable laws of intestacy.
Devolution of Deceased Tenant’s Share
When a tenant in common dies, their share in the property becomes part of their estate. The devolution of the deceased tenant’s share depends on whether they left a valid will or died intestate (without a will).
a) Will Exists: If the deceased tenant had a valid will, their share will pass to the beneficiaries named in the will. The executor of the estate is responsible for distributing the deceased tenant’s share in accordance with the will’s instructions.
b) Intestate Succession: In the absence of a valid will, the deceased tenant’s share will follow the intestacy laws of the jurisdiction. These laws typically dictate that the share is distributed among the deceased tenant’s heirs, such as their spouse, children, or other close relatives.
Probate Process
In most cases, when a tenant in common dies, their share may be subject to the probate process. Probate is a legal procedure that validates the deceased person’s will, settles outstanding debts, and transfers assets to the rightful beneficiaries. During probate, the court will determine the rightful distribution of the deceased tenant’s share according to the will or applicable laws of intestacy.
Co-ownership Challenges
The death of a tenant in common can create certain challenges for the surviving co-owners:
a) New Co-Owner(s): If the deceased tenant’s share passes to someone who was not previously a co-owner, this new individual now becomes a tenant in common with the remaining co-owners. It is crucial to establish clear lines of communication and mutually agree upon the use and management of the property.
b) Disagreements and Buyouts: In situations where the surviving co-owners cannot reach a consensus on the future of the property, conflicts may arise. In such cases, one or more co-owners may explore the option of buying out the deceased tenant’s share to maintain sole control over the property.
c) Forced Sale: In some instances, if the surviving co-owners cannot resolve their differences or find a suitable resolution, they may resort to a forced sale of the property. This involves selling the entire property and dividing the proceeds among the co-owners, including the estate of the deceased tenant.
Estate Planning Considerations
To mitigate potential complications and uncertainties associated with tenancy in common upon death, appropriate estate planning measures can be implemented. These may include:
a) Creating a Will: A comprehensive will allows tenants in common to clearly outline their wishes regarding the distribution of their share in the property. This ensures that the property passes to desired beneficiaries and minimizes the likelihood of disputes.
b) Co-Owner Agreements: Formalizing co-owner agreements can establish guidelines for property management, dispute resolution mechanisms, and options for buying out shares upon death or other circumstances.
c) Trust Arrangements: Setting up a trust can provide added protection and flexibility in managing the property. The trust document can stipulate how the property is to be managed during the tenant’s lifetime and specify the distribution of shares upon death.
Conclusion
Tenancy in common offers individuals an opportunity to jointly own property while maintaining separate interests. When a tenant in common dies, their share in the property passes through probate or intestacy laws, depending on whether a valid will exists. It is important for co-owners to understand their rights and obligations, and consider estate planning measures to minimize complexities and potential conflicts. Seeking legal advice from professionals experienced in real estate law and estate planning can help ensure a smooth transition.