This agreement does not necessarily mean that the co-owners will physically occupy the property. It also allows the co-owners to share the revenue by renting the property. Also, one of the co-owners can occupy the property and others might opt to stay elsewhere.
In this structure, each co-owner has a definite share in the property. If there are two co-owners of a property, they might have equal share, or one could own a greater share than the other. In this structure, an individual owns an undivided fractional interest in his share, out of the entire property.
Further, each co-tenant receives a separate deed and title insurance for his/her percentage interest in the property and has the same rights as that of a single owner.
Difference Between Joint Tenancy and Tenancy in Common
The primary difference between the two is the way in which the property rights continue in case of death of one of the co-owners. In a joint tenancy, if a co-owner dies, his share of the property is passed onto the remaining owners.
In the case of the latter, if a co-owner dies, his share is passed along according to his last will and testament. In case there is no will or testament of the deceased co-owner, then the share is passed according to the rules of the state.
This agreement gives the co-owners exclusive rights over the decision of passing their share of property after their death, and this is the main reason why tenancy in common is popularly used. So, if you want to pass percentage property interest to someone else, other than the co-owner, after your death, then you must opt for this alternative.
What Does this Agreement Include?
- It mainly states the percentage of ownership of each co-owner. Without this statement, all the co-owners will be considered to own equal share in the property. Generally, some might purchase a larger share of the property, while some might purchase a smaller share, and the separate ownership percentages need to be declared in writing.
- It includes agreed upon buy-out prices, when a buy-out can be refused, and what rights the inheritors have over the property after death of one of the initial co-owners.
- This agreement also specifies whether one of the co-owners can modify the property. If yes, it also states what financial obligations this will incur on all the owners.
- It allows co-owners to sell or dispose their portion of the property, but not before first offering the fellow co-owners a chance to buy their interest. The manner of notification and acceptance of this offer is clearly stated and described in the agreement.
- Property management includes common costs and utilities.
- It includes the description of financial obligations for each owner. This includes initial deposits and taxes. It also includes common area maintenance and other expenses.
- Rules about the actual usage of the property by the co-owners including things like pets, noise levels, floor covering, etc., and responsibility of each co-owner for property maintenance.
- Apart from the aforementioned points, it also includes details regarding dispute resolution, mortgage of the property, sale of property, right to lease, improvements and repairs, and termination and signatures.