The concept of joint ownership is governed by many different laws such as Contract Act, Sale of Property Act, and Transfer of Property Act. The simple definition is a property, whose title of ownership is held by more than one person.
There are several different concepts that come into picture as a result. Based upon the characteristics of this, some important classifications have been made in the different types.
A joint agreement, and its content decides what type of ownership it is. It is always within two or more than two legally legitimate people or parties. The following are some commonly observed types of agreements. While going through the following categories, one must note that a tenancy is a synonym of ownership.
Joint Ownership with Rights of Survivorship
This is an agreement, where more than one people hold 'shares', of the property. These shares are not divisible but a joint owner can rightfully and legally sell his 'share' to another party at a price higher than the earlier price, with the consent of others.
With the death of an owner, the property automatically gets transferred to an heir, in accordance with the operation of law. However, in the absence of an heir, the share automatically passes over to the surviving owners.
Tenancy by Entirety
A tenancy by entirety is a unique type of ownership. In such an agreement, a husband and wife own equal rights and share of the property. In such a situation either of the two is prohibited from selling their share. After divorce, this often becomes a difficult situation and the court may intervene in case of a liquidation dispute.
Tenants in Common
The concept of tenants in common, is similar to that of an ownership with rights of survivorship. The difference is that the owner can sell his share to another person without the consent of the other owners.
Another differentiating point is that the owners can own unequal number of non-homogeneous shares. The ownership can be passed on to an heir only by the way of a will.
Community Owned Property
The concept of community owned property is different from that of normal ownership. A property becomes community owned, only when it is acquired through a marriage. The community property law, unfortunately is applicable only in 9 states, namely, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington.
According to the terms, any property acquired before marriage or by inheritance, is considered and treated as a personal property. The community ownership is in most cases, applicable for people who purchase a property just after their marriage. Now, one might argue that a community property can also become a property under the provisions in entirety.
A property becomes a community property, on the signing of a contract between the joint owners. The advantage of such a property ownership is that the couple can have a house plan or an estate plan that becomes applicable in case of death of a particular spouse. An estate plan basically effectively and legally transfers the lien to the surviving spouse.
The best way to identify the type of joint ownership is to take a look at the terms of transfer agreed at the time of real estate investment, they will tell you all.