What Is a Joint Tenancy? Here’s What You Need to Know

Key takeaways:

• A joint tenancy is a legal arrangement between two or more individuals who own property together.
• A joint tenancy is only valid when the four unities are present: Unity of Title, Time, Interest, and Possession.
• Selling shares in a joint tenancy can sever the joint tenancy and convert it into a tenancy in common.

Buying a home is a significant life event, and for many, it’s a journey taken with another person. While there are several ways to hold property jointly, one common method is joint tenancy. Understanding what a joint tenancy is and how it functions is crucial for anyone considering co-ownership, especially due to its distinct implications for ownership rights and inheritance. 

This Redfin Real Estate article will explore the ins and outs of joint tenancy, helping you determine if it’s the right choice for your co-ownership aspirations. Now, let’s get started.

What is a joint tenancy, and how do they work?

A joint tenancy is a legal arrangement where two or more individuals own property together, with each owner having an equal and undivided interest in the entire property. The defining characteristic of a joint tenancy is the “right of survivorship.” This means that upon the death of one joint tenant, their share of the property automatically passes to the surviving joint tenant(s), bypassing the probate process and any provisions in a will.

What makes a joint tenancy valid?

For a joint tenancy to be validly formed, four unities must be present:

• Unity of Title: All joint tenants must acquire their interest through the same deed or instrument.
• Unity of Time: All joint tenants must acquire their interest at the same time.
• Unity of Interest: All joint tenants must have an equal share and an identical interest in the property. For example, if there are two joint tenants, each owns 50%.
• Unity of Possession: All joint tenants have an equal right to possess and use the entire property.

If any of these unities are broken, the joint tenancy may convert into a tenancy in common, which has different implications for ownership and inheritance.

How ownership rights are affected

In a joint tenancy, each co-owner has an equal stake in the property, regardless of their financial contribution. This means that if two people own a home as joint tenants, they each own 100% of the property, not 50% each. This concept of undivided interest is key. Each joint tenant has the right to use and enjoy the entire property.

The most significant impact on ownership rights in a joint tenancy is the right of survivorship. When one joint tenant dies, their ownership interest does not become part of their estate. Instead, it automatically transfers to the surviving joint tenant(s). 

For example, if a married couple owns a home as joint tenants, and one spouse passes away, the surviving spouse automatically becomes the sole owner of the property. However, this also means that a joint tenant cannot will their share of the property to an heir. Their interest is extinguished upon death and absorbed by the remaining joint tenants.

Establishing a joint tenancy

To establish a joint tenancy, the intent to create this specific form of co-ownership must be clearly stated in the property deed or other legal documents. Simply owning property with another person does not automatically create a joint tenancy; specific legal language is required. Often, the deed will include phrases like “as joint tenants with right of survivorship” or “joint tenancy.”

It’s advisable to consult with a real estate attorney when establishing a joint tenancy. An attorney can ensure that the necessary legal formalities are met and that the implications of joint tenancy are fully understood by all parties involved. This is particularly important because breaking one of the four unities, even unintentionally, can change the nature of the co-ownership.

Can a joint tenant sell their shares?

While a joint tenant has an undivided interest in the whole property, they can sell or transfer their individual share. However, doing so will sever the joint tenancy and convert it into a tenancy in common for the selling party and the remaining original joint tenant(s).

For example, if A, B, and C own a property as joint tenants, and C sells their interest to D, then A and B remain joint tenants with each other, but D becomes a tenant in common with A and B. If A or B were to die, their share would go to the surviving joint tenant (either B or A, respectively). If D were to die, D’s share would go to D’s heirs, not to A or B.

Pros and cons of a joint tenancy

Like any legal arrangement, joint tenancy comes with both advantages and disadvantages.

Pros:

• Avoids probate: The most significant advantage is the right of survivorship, which allows the property to pass directly to surviving co-owners upon death, bypassing the often lengthy and expensive probate process.
• Ease of transfer upon death: The transfer of ownership is generally straightforward and quick when a joint tenant passes away.
• Equal rights: All joint tenants have equal rights to possess and enjoy the entire property.
• Affordability: Since joint tenancy is the co-ownership of a property, each tenant can split the purchase price of a property. Thus increasing purchasing power.

Cons:

• Loss of control over inheritance: Joint tenants cannot will their share of the property. Upon death, it automatically goes to the surviving joint tenants, regardless of their wishes.
• Liability: All joint tenants are equally responsible for the property’s debts, taxes, and maintenance, even if one co-owner contributes less financially.
• Difficulty in selling: All joint tenants must agree to sell the entire property. If one tenant wants to sell and others don’t, it can lead to disputes and potentially a partition lawsuit.
• Severance risk: A joint tenancy can be unilaterally severed by one joint tenant selling or transferring their interest, converting it into a tenancy in common.

Joint tenancy could be right for you, or not

Joint tenancy offers a clear and often efficient way for multiple individuals to co-own property, primarily due to its distinct right of survivorship. While it simplifies the transfer of property upon death and bypasses probate, it also comes with limitations regarding individual inheritance wishes and potential challenges if co-owners disagree. For those seeking a straightforward succession plan for co-owned property, joint tenancy can be an excellent option, but always with a thorough understanding of its legal ramifications.