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The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: Luis Alvarez/Getty Images June 06, 2022 Rae Hartley Beck is a writer and editor with over eight years of experience in personal finance. Her work has most recently appeared in Bankrate, MoneyWise and Investopedia. Rae specializes in credit card rewards, investing, real estate, home improvement, lending and financial advice for millennials, Gen Z, Gen Alpha and their parents. Michele Petry is a senior editor for Bankrate, leading the site’s real estate content. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Buying or selling a home is one of the biggest financial decisions an individual will ever make. Our real estate reporters and editors focus on educating consumers about this life-changing transaction and how to navigate the complex and ever-changing housing market. From finding an agent to closing and beyond, our goal is to help you feel confident that you're making the best, and smartest, real estate deal possible. Bankrate logo Editorial integrity
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Joint tenancy is a legal way to when multiple individuals purchase it together, with equal interest in and equal rights to the property. The most common form of joint tenancy is for married couples who want to own their home equally. But it can be an option for any group of people who want to co-own property. Joint tenancy with rights of survivorship
Here’s one reason why this ownership method is popular for married couples: In a joint tenancy with rights of survivorship (JTWROS), if one of the owners passes away, their portion of ownership automatically passes to the other owner or owners. That means a newly widowed spouse can remain in the home with full ownership and no legal battles to fight. Married or not, JTWROS allows the property in question to skip and pass directly to the surviving owner(s). Avoiding probate is especially relevant if there’s a need for one of the tenants to remain in the property continuously as their residence or to keep a business running. To remain in the property, the survivor will only need to provide proof of the JTWROS and a death certificate or other proof of passing for the deceased. How does joint tenancy work
A joint tenancy is created at the time a property is purchased. For a joint tenancy to be created, all of the following criteria, called the “four unities,” must be met: All tenants must obtain the property at the same time. All tenants must have acquired the title of the property by the same document. All tenants must share equal interest in the property. All tenants must exercise equal rights to ownership. If any one of the above conditions aren’t met, then you may legally have a instead of a joint tenancy. More on that next. Joint tenancy vs tenancy in common
Despite the similar-sounding names, these two forms of legal title are not the same thing. With a tenancy in common, owners have more control over who gets their share of the property in the event of their death. Here are a few key differences: JOINT TENANCY TENANCY IN COMMON If one tenant passes, the property automatically goes to the surviving tenant If one tenant passes, they can leave their share of the property to whomever they wish Four unities must be met, namely that all tenants must have equal interest in the property at the time of purchase Equal interest, rights and acquisition is not required — one tenant in common may own a larger share than another Terminating a joint tenancy before one tenant dies, called “severance,” typically leads to a tenancy in common among the rest Any tenant in common can sell their share in the property at any time Joint tenancy pros and cons
As with every aspect of buying real estate, joint tenancy has pros and cons that should be considered when choosing this option. Pros
With a joint tenancy, if one tenant passes away, the property ownership transfers directly to the surviving tenant or tenants. This makes it a good choice for married couples who both call the property home. In addition, joint tenancy allows the property to bypass probate entirely in the event of a death. This saves a lot of headaches and inconvenience during an already difficult time. All joint tenants enjoy equal ownership and equal rights. Cons
In the event of your death, property owned in a joint tenancy automatically transfers to your other tenant(s). If you are hoping to leave your property to a different heir, or to a charity or other organization, you should look into other options. A joint tenancy can be terminated by a creditor attempting to extract a debt from just one tenant, even if the other tenants do not owe any debts. So it’s not a good situation if one of the tenants is in debt, has bad credit, or has the potential to be involved in a liability suit (either personally or professionally, such as medical malpractice). SHARE: Rae Hartley Beck is a writer and editor with over eight years of experience in personal finance. Her work has most recently appeared in Bankrate, MoneyWise and Investopedia. Rae specializes in credit card rewards, investing, real estate, home improvement, lending and financial advice for millennials, Gen Z, Gen Alpha and their parents. Michele Petry is a senior editor for Bankrate, leading the site’s real estate content. Related Articles