What does Tenants in Common mean?

What does Tenants in Common mean?

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Last week I was helping out with an open house in Williamsburg Brooklyn, a stones throw from the NYC Marathon route down Bedford ave on a rainy Sunday. As I was shuffling along to make my appointment on time I came a loft style building on Metropolitan ave. This particular building was a bit confusing for me as the ownership was listed as "Tenants in Common". Even as an agent 8+ years in the business, I didn't know as much as I would have liked. The building seemed to be part coop, part air bnb, part squatters right loft? Currently getting their certificate of occupancy, it seems this particular ownership likely held up renovations and progress in this lovely home. Large wide hallways, walk up building with floor thru lofts that would be the envy of any Brooklynite. This likely once illegal loft has moved on from its former self with a portion of its rights on sale for a cool $1.4 million for the right investor. The current owners all own the building in legal definition of Tenancy in common so to learn more I referenced investopedia.com

Tenants in common or as some people say (TIC) are co-owners who each own a separate and undivided interest in the same real property.  They all generally have an equal right to the possession and use of the property. This division of the property is usually written up as an agreement between all owners of the property. If one or more tenants die, the undivided interest passes to the tenant's heirs through a probate proceeding; the interest does not pass to another tenant in common unless the surviving co-owner is an heir or a purchaser.

What are the Pros of Tenants in Common? 

Ownership Percentage

People do not have to be married to be tenants in common. They do not even need to both occupy the residence. Two or more investors might choose tenancy in common when investing in rental property. One advantage of tenancy in common is that the ownership does not need to be evenly split. A man who contributes 60 percent of the money up front might choose, along with his partner, to specify a 60 to 40 ratio--reflecting each person's respective investment in the property.

Interest and Flexibility

A person might have a minority interest as specified in the tenancy in common deed, but he still has the right to make use of the entire property. The equal use of unequal interest in a property could be advantageous to some, while a troubling proposition for others. Investors who have no interest in actually living in a space might find the arrangement comfortable. One advantage of tenancy in common is that each individual has the right to deed his portion, or mortgage it without getting the approval from the other tenants in common. The flexibility can be good for those seeking to get out of an investment, but disadvantageous for anyone seeking stability.


One disadvantage of tenancy in common is that there is no right of survival. Each owner must specify the heir for the portion that they own. Even if one person decides to make the other tenant in common the heir, the property will need to go through probate for assessment and administration. The probate process can take months, and can cost thousands of dollars. The advantage of the arrangement is that each tenant in common can determine the respective heirs without the approval of the other parties. When a change in ownership becomes a problem, a single tenant could force a sale after applying for a "partition action."

What are the cons of Tenants in Common? 

  • Each tenant in common interest is an asset of each co-owner and is subject to each of his/her co-owner creditors. 

  • Interest in the property may be transferred by will. The ownership interest of a tenant in common is transferable. Unlike a joint tenancy, if a tenant in common dies, the interest in the property would pass to the heirs like all other asset or personal property.
  • All tenants have equal right to possession. The main problem with Tenants In Common is that the other tenant(s) can do whatever he/she wants with his/her interest. Like what? One tenant-in-common (T.C.) could take out a loan on his/her interest in the property. Additionally, the T.C. interest owned by one owner is subject to that owner’s creditors. So, if T.C. named John, owns a 1/2 interest in a $500,000 vacation condo as T.C. with his brother Frank, John’s 1/2 interest can be taken from him in a lawsuit or normal negligence case. There is no protection of that interest.

I hope you learned more about Tenants in Common, and maybe this will be something you can do for a property in the future. Split that dream beach house or wooded cabin with your best friends? Or now that you know more, no way. If you are interested in learning more, check out our other posts and blogs or contact me directly. Enjoy the week! 


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