Tenants In Common Own Undivided Share Of The Property

2007-04-12 11:34:06

( Insurance )



If you plan to purchase a real estate which you intend to resell for profits at a later time, or you wish to become a property landlord, you and your fellow investment-minded friend can pool your resources and acquire the property through tenancy in common. This may be an informal arrangement compared to forming a partnership. But it offers convenient legal means to save you the expensive and tedious process of registering the formal partnership.

As tenants in common, you and your friend own the property in common but each has an undivided fractional interest. It is not necessary that you raise an amount equivalent to one-half of the value of the property. You may want to contribute only one-third or one-fourth of the whole amount, so long as your pooled money will allow you to buy the property.

Your rights as tenants in common include the possession of the whole investment property. Remember that it is not the property that is being divided; it is your ownership interest. To avoid confusion, you must ensure that the legal documents state how much interest belongs to each of the tenants in common. The law will presume that you hold equal shares of the property in the absence of any stipulation to that effect.

Like owning a real estate by one individual, you will have the right to convey, transfer, sell, assign, pledge or encumber your interest without the need of getting the consent of the other tenants in common. But you can never transfer the whole ownership of the property to a third person without prior approval from the others. And in case one of the tenants in common dies, the undivided interest that belongs to that tenant will not accrue to the other surviving co-owners but will be passed on the legal heirs.


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