Real estate ownership can be of two types- it can be owned by a single individual or one can own it jointly along with another person (co-ownership). There are also several ways to own a property jointly - Joint tenancy is one of them.
Joint tenancy is a special form of ownership where two or more people own a property together, each having an equal share and any tenant can access all parts of the property without any restrictions. It works on the concept of unity. It is not necessary that a co-owner has to be a relative, they can be married or unmarried couples, friends and business associates.
The main feature that distinguishes joint tenancy from other types of real estate ownership is that it includes the right of survivorship. Under this right of survivorship when a joint tenant dies, his shares are automatically passed on to the other tenant or surviving co-tenant(s) without having to go through the court system.
In a valid joint tenancy agreement, four units are usually required: title, interest, possession and time. The joint tenants hold the property under the same title and if they mutually agree to sell the property, they must equally divide the proceeds of the sale.
There are several benefits of joint tenants in real estate ownership. Some of them are as follows:
It enables all the co-tenants to split the down payment and to share all responsibilities for paying off debts
and maintaining and improving the property.
Normally, joint tenants are entitled to a share of the profits or rent that the property receives. The rental income is divided among all the tenants in equal proportions.
When it comes to qualifying for a mortgage joint tenancy provides an advantage.
Another advantage is that neither party in ownership needs to be related or married.
As joint tenancy creates the rights of survivorship it ensures the surviving co-tenants immediate access to their shares of the property without going through probate, the lengthy legal process that the court system uses to validate wills.
It provides equal rights and obligations to the co-owners.
Although these are the advantages of owning real property as joint tenants, there are some drawbacks of joint tenancy like more responsibility, lack of freedom, relationship strains, exposure to creditors, lack of inheritance rights, gift taxes etc. So, before setting up any arrangement individuals should evaluate their particular situations.
