Real Estate Definitions: Co-owner Vs. Joint Owner

Real Estate Definitions: Co-owner Vs. Joint Owner
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In the real estate world, there is no legal title of "co-owner." Real estate ownership of more than one person can have the following designations: joint tenancy, tenancy in common, and tenancy by the entirety. Joint owners have rights that are defined by the type of ownership method chosen. The term "co-owner" implies that more than one person has an ownership percentage of the property. Joint ownership, in its three common forms, refines and defines the rights of the co-owners.

Understanding Co-Tenancy

Co-tenancy is the concept in U.S. real property law -- which is based on English common law -- that defines the different ways co-owners hold title. This concept controls the rights and duties of co-owners of real estate, including the transfer of real properties when one owner dies. In "community property" states, which applies to married couples, joint ownership applies to all assets in efforts to determine the manner to divide real estate and other hard assets in the event of a divorce.

Joint Tenancy

This type of joint ownership means that each co-owner has complete ownership of the property. There is an indivisible percentage, as each person technically owns 100 percent of the real estate. This allows transfer of title from two or more joint tenants to the surviving owner after the death of the other.

Legally important, this joint tenancy feature avoids probate complexities. The ownership of the deceased tenant simply disappears and cannot pass to his heirs, if different from the other co-owner. This ownership is, therefore, popular with married couples and other family co-ownerships, e.g., parents and children. This feature is called the "right of survivorship."

Tenancy in Common

Real estate co-owners who do not select another form of holding title, whether they are related or not, will be listed as tenants in common. Each co-owner legally owns a separate and distinct share of the real property. Two co-owners, each a tenant in common, may or may not own 50 percent of the home or land.

There is no right of survivorship, which means that upon the death of one co-owner, her share will pass to her heir(s) or, if there is a will, to her designee. This form of ownership is most popular with co-owners who are neither married nor have any familial relationship.

Tenancy by the Entirety

This type of ownership is very similar to joint tenancy. Not recognized by all U.S. states, tenancy by the entirety is available only to married couples. A few states now allow this option for co-owners who are domestic partners or, where legal, have had a civil union. This ownership option legally treats the co-owners as a single ownership entity.

One co-owner does not have the right to terminate the tenancy; both owners must agree to do so. Additionally, tenancy by the entirety may permit protecting the property from the creditors of one spouse, even if just one spouse files for bankruptcy protection. Similarly, should a spouse with debt die, creditors may be prohibited from enforcing a lien against the surviving non-debtor spouse. State real estate laws control these additional features.