Co-Ownership can prevent many challenges that home owners may face in the future. Careful legal planning with the consultation of a lawyer is necessary when deciding on the type of co-ownership.
Joint tenancy is a type of co-ownership that gives all parties an equal share of the property. This form of co-ownership allows for identical undivided interests in the property. For example, for two people, it would be split evenly. This situation would be applicable for spouses as it would mean in the event of death of one spouse, the other party would become the sole owner of the property.
Tenancy-in-Common is a type of co-ownership that would allow owners to have distinct interests in the property. An example of this is a property owned by 3 siblings. One sibling may have a 1% interest in the property, and the others have 40% and 59%. Each co-owner has a divided percentage interest in the property. Unlike joint tenancy, if one of the co-owners passes away, the surviving owners do not automatically become the owners of the deceased’s interests in the property. In this case, that interest would be distributed to their beneficiary according to their will. This process, if not done correctly, can have major implications on all parties involved. It is necessary to consult a lawyer and have a co-ownership agreement set out explaining the rights to the property.