Joint Tenancy Guide: Understanding Property Joint Tenancy

Joint tenancy with right of survivorship (JTWROS) is a legal agreement between two or more parties who share ownership of personal property—like real estate, bank accounts, or brokerage accounts—with shared rights and obligations. Joint tenancy grants undivided interests of a property to two owners, who each co-own the whole property rather than simply a percentage of it. This agreement of co-ownership creates a right of survivorship, meaning that if one owner dies, their interest is directly passed to the other co-owner or co-owners without needing to go through court or probate—which is a potentially lengthy process in which a will is validated by the law.

Tenancy in common is a similar arrangement to a joint tenancy with some important distinctions. Tenancy in common is a percentage-based shared ownership in which shares can be traded and new tenants added throughout the term of the agreement. Joint tenants have equal investment and responsibility to the property. In the event that one shared tenant dies in a tenancy in common, their share does not automatically transfer to the other tenant but can be distributed through the stipulations of a will after the probate process. Joint tenants with rights of survivorship, however, do not need to bother with the probate process.

Joint tenancy is a type of ownership agreement typically made when purchasing real estate. Two or more parties will decide they want to share ownership of a new property. This might be a married couple, friends, family members, or business partners. The joint tenants will sign together on a deed or a title, giving each party an equal share of the property.

Joint tenants share equal benefits and responsibilities for the entire property. If the property is rented or sold, both owners are entitled to an equal share of the profit. Each co-owner is also responsible for costs such as mortgage payments and property taxes. If one party fails to meet their financial obligations, the other parties are all equally responsible for the costs and potential debts of the other party.

There are a number of benefits to joint tenancy, including:

1. 1. Right of survivorship. The right of survivorship means that if one owner dies their interests in the shared property are immediately transferred to the other co-owner. This is helpful in avoiding probate, a legal process wherein the probate court reviews the deceased owner's will for legitimacy. In a joint tenancy, the surviving joint tenant or tenants automatically inherit those interests in the ownership of the property.
2. 2. Equal rights to property. The joint tenancy agreement grants equal rights to all co-tenants. Shares and interests cannot be redistributed to grant one tenant a greater percentage of the ownership. This is particularly beneficial for group joint tenancies, such as in joint ownership of community property.
3. 3. Shared responsibility creates security. Each co-tenant in a joint tenancy shares in the financial responsibilities of the property, including estate taxes, property taxes, and debts. One tenant cannot take out a mortgage loan on the property and leave the other tenant with the debt creates extra security for both tenants.

There are also a number of disadvantages to joint tenant agreements.

1. 1. All parties must consent to sale. Selling a home owned through a joint tenancy agreement can be complicated, as one party cannot sell property without the consent of the other. This often comes up in divorces between couples who are joint tenants.
2. 2. Survivorship can’t be altered. The right of survivorship in joint tenancy means that the deceased party can’t pass their interests to any heirs other than the joining tenant. The surviving owner holds all rights to their interests.
3. 3. Your co-tenant’s debts become your debts. In a joint tenancy, both parties are responsible for any debts related to the property. That means that if you share a bank account in a joint tenancy, you are responsible for the debts that your co-party has accrued in association with that account.

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