Joint Tenancy And Right Of Survivorship In Real Estate Explained

A Joint Tenancy with the Right of Survivorship may be set up in some land deals. There are some unique aspects of this kind of real estate transaction.

A Joint Tenancy is when two or more people own a property together and jointly; this can be any two people, including married couples, family, friends, or even business associates. One aspect of Joint Tenancy is the Right of Survivorship which states if one party in the Joint Tenancy dies, their ownership in the property is passed to the other Joint Tenancy owners and not their heirs.

What Is Joint Tenancy?

Contrary to what many may think, having a joint tenancy has nothing to do with two people leasing an apartment together. Joint Tenancy has to do with ownership and is when two people own a property together.

Here are some aspects of Joint Tenancy in Real Estate:

Two or more people own a property together.
Each property owner has equal rights. If you have two owners, they own the property 50/50; if you have four owners, they own it 25% each.
Each owner also has an equal amount of financial obligations and benefits.

Married and non-married couples can create a joint tenancy. Friends, relatives, or business associates can also form a joint tenancy.
A joint tenancy automatically creates the Right of Survivorship.
Joint tenancy is not the same as tenancy in common, where a decreased tenant’s share would go to the heirs.

Joint tenants usually come together at the same time.
Joint tenants make a legally binding agreement through the property deed.
The deed will name all joint tenants as owners of the property.

All joint tenants are legally responsible if a loan or mortgage is taken out on the property.

Joint tenancy is usually associated with real estate transactions. In a Joint Tenancy, two or more parties will come together to own a property jointly.

The joint tenancy becomes legally binding through the property deed; the deed will name all parties as the property owners.

As joint tenants also have equal shares in the property, they are responsible for paying their share, including mortgage payments, property taxes, and maintenance. The other party must assume responsibility if one party fails to meet these obligations.

What Is The Right Of Survivorship In Real Estate?

The Joint Tenancy automatically comes with the Right of Survivorship. The Right of Survivorship means that if one party of the joint tenancy dies, then their share goes back into the joint tenancy.

If, for example, you have four cousins who all own a property under Joint Tenancy; Bill, Tim, Ralph, and Nancy are all cousins who own a property together. Let’s say that Bill suddenly dies in a car accident.

Bills’ share in the Joint Tenancy will now go to the surviving member of the joint tenancy, or now Tim, Ralph, and Nancy own the property. Let’s say the following year Ralph dies. Then now, Nancy and Tim will own the property together.

Even though both Bill and Ralph have left behind a wife and children, their wives and children will not have any rights to the property. Instead, it will be jointly owned under the Joint Tenancy by Nancy and Tim.

One of the pros of having a Joint Tenancy is that when someone dies, the property does not need to go through probate or transfer the deceased person’s assets into the estate. A Joint Tenancy will avoid what can be the lengthy process of probate. When one party dies in the joint tenancy, the other parties immediately take ownership of the property.

But a disadvantage is that the heirs of the deceased do not have rights or claim to the Joint Tenancy.

Joint Tenancy And Divorce

If a married couple owns a property together as a Joint Tenancy, the Joint Tenancy can get messy if they decide to separate or there is a divorce. Divorces can complicate the matters of a Joint Tenancy, especially if it is an especially nasty divorce or separation.

Under a Joint Tenancy, all debits are owned by both parties, and neither of the parties can sell their assets that are joined together without the consent of another party; a particularly nasty divorce can make it difficult for the two parties to agree on a Joint Tenancy.

The reason is in a divorce, the other person has not died, so even if the marriage relationship is dissolved, their right to Joint Tenancy is not. In the Joint Tenancy with a married couple, the property will only pass to the other party under the Right of Survivorship, not when the marriage is dissolved.

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