Tenancy in Common in California: Types of Co-Ownership

Many people confuse joint tenancy with tenancy in common in California. These are sometimes referred to as joint interest or interest in common in relation to real property. A tenancy in common agreement can be an important estate planning tool. 

Here are the differences between joint interest and interest in common, and what you need to know to determine if tenancy in common is the right type of co-ownership for your situation.

What is Tenancy in Common Under California law?

The definitions and caveats of tenancy in common is described in §683 of the California state code on property laws. Tenancy in common is a form of property co-ownership in which a property is not shared equally and is most commonly seen when co-owners are unrelated. By contrast, a joint tenancy agreement gives equal shares to two parties and is most commonly seen as community property among married couples and domestic partners.

There are other differences between tenants in common and joint tenants. In joint tenancy, co-owners are named at the same time on the same deed. If some owners are added to the deed later, the deed becomes a tenancy in common, even if the co-owners have equal interest.

Owner A has full ownership of a property. Owner A gets married to Owner B and adds them to the deed of the home. The deed is now a tenancy in common, even if both parties have equal shares because Owner B was named on a later recorded deed.

Tenants in common generally have the same legal rights to the property they co-own as joint tenants. Unless there is a tenancy in common agreement in place stating otherwise, all owners have the same rights to enjoy the property. However, each owner gets a portion of any income earned from the property in proportion to their share of interest in the real estate. 

Tenants in common can also transfer their interest share of tenancy in common at any time, to anyone. This includes transfers through probate.

Tenancy in Common & Probate Law

The biggest difference between tenancy in common and joint tenancy is survivor’s rights. A co-owner with survivor’s rights is able to pass their share of the property to their heirs as a part of their will and estate planning. Tenants in common have survivor’s rights, making them a popular estate planning tool.

Owner A and Owner B share ownership of a property in a 60/40 split, which is a tenancy in common. Owner A dies, leaving their shares to their children. This creates a new tenancy in common arrangement in which the children would be given equal shares to one another, but would still be tenants in common with Owner B.

There are no survivor’s rights in joint tenancy. When a joint tenant dies, their share of the property automatically transfers to the surviving owner or owners.
Owner A and Owner B share equal ownership of a property. Owner A dies and names a beneficiary for their share of property interest. The joint tenancy arrangement supersedes the will, and Owner A’s share of the property transfers to Owner B automatically.

Community property under California state law, such as real estate purchased during a marriage or domestic partnership, is a joint tenancy arrangement. Each of the owners shares equal interest in the property and are both named on the same deed. However, community property can be changed to a tenancy in common via divorce proceedings to allow each co-owner the ability to transfer their shares to heirs or others.

Common Problems with Tenancy in Common

Tenancy in common is attractive because you have full control over what happens to your share of the property, whether in this life or as you pass on to the next. However, there are some disadvantages to consider.

First, tenants in common share in the expenses according to their interest in the property, including tax liability and insurance. Co-owners that have a much larger interest in the property than other owners also shoulder most of this expense. Co-owners are also liable for any incident on the property that leads to a lawsuit.

Owner A has a 50% interest in the property, Owner B has a 30% interest, and Owner C has a 20% interest. Owner C creates or neglects to correct a hazard while on the property without the other owners. Someone is injured as a result of the hazard, and a lawsuit is filed. Even though Owners A and B were not party to the incident, they are responsible for the bulk of any monetary award granted to the plaintiff in court. 

Another disadvantage is that if one co-owner is sued or files bankruptcy, all co-owners could be forced to sell. In addition, co-owners often find themselves in disputes that lead to a partition action in which the property itself is divided or the property is sold, and the proceeds distributed among all owners according to their interest share.

Something many co-owners of property don’t understand is that each co-owner can get a mortgage based on their interest share of the property. If the mortgage isn’t paid and the bank forecloses, the lender could try to foreclose on the entire property. This may also lead to a partition action in tenancy in common arrangements. 

A tenancy in common agreement is the best way to avoid these issues. A formal interest in common agreement outlines what happens in each of these situations, and supersedes the base guidelines that dictate tenancy in common co-ownership of a property when no agreement exists.

How to Change Joint Tenancy to Tenants in Common California

Tenants in common is the preferred type of co-ownership when you want to name a beneficiary for your interest share as part of your estate plan. A joint tenancy can be changed to a tenants in common agreement in California. The tenancy in common agreement must name all co-owners and list their interest share of the property. A tenancy in common agreement also outlines the rights, responsibilities, and duties of co-ownership to avoid disputes in the future. It is possible to find a Tenancy in Common Agreement form, but it is best to consult an attorney. Have a notary present during signing if you decide to complete the agreement yourself.

Contact an Experienced Los Angeles Partition Attorney

A partition attorney is a lawyer specializing in real property ownership issues such as tenancy in common. It is important to protect your rights and the rights of your heirs. If you want to learn more about how to change your joint tenancy to tenancy in common, contact our experienced Los Angeles partition attorneys today.