There is often much confusion between joint tenancy and tenancy in common. Understanding the similarities and differences can help you in the event you are selling property, creating your will or getting a divorce. In North Dakota, it must be stated on the property’s deed when either exists.
Joint tenancy occurs when two or more people purchase a property together simultaneously. One person cannot claim to own only a portion of the property while another says they own a different part. Co-owners must possess the same share of the property. For example, if one person owns 50% of the property, another must also own 50% of it. If the specific terms of joint tenancy are not followed, the property automatically defaults to tenancy in common status. Most property held in joint tenancy avoids probate when a person dies, according to North Dakota real estate law. In most cases, a person cannot choose to leave their share of the property as part of their inheritance to another person at the time of their death. If a creditor comes after one of the owners, they can force the other tenants to sell the property. In some cases, giving a share of the home to someone else may mean paying gift taxes.
Tenancy in common
Tenancy in common occurs when two or more people buy a property together at different times. There is no expectation that people will own equal shares of the property. Regardless of their share, all owners have the same rights to occupy the property. Since each share of the property can be sold individually, other owners may discover that one owner has sold their share to a stranger. Each owner can put it in their will or other legal documents who gets their share of the property at the time of their death. Each party must pay taxes and mortgages. Otherwise, a lien can be placed against the home, forcing everyone to sell the property.
There are advantages and disadvantages to joint tenancy and tenancy in common. It’s important to understand the concepts and the rights and responsibilities of each type of tenancy.