Tenants in Common vs Joint Tenancy – Which Is Better?

You have seen these pretty “old school” words on your quitclaim deed to your house in California – “as tenants in common” and “as joint tenants”. What does this mean? Which one is better? 

When a group of people shares ownership of a home, each one of those people owns a share of the property. Joint tenancy with right of survivorship and tenants in common are the two most common ways to hold title to your property.  

Joint tenancy is similar to tenants in common because they each share the right of possession. This means that anyone listed on the deed can live in that property. 

So what is the difference? 

Need help sorting out the titles on your tenancy or need advice pertaining to joint tenancy/tenancy in common? Sign up for a strategy session today.

Tenancy In Common

Tenancy in common is simply a partnership. 

Let’s say you own a property with three people as “tenants in common”. Upon the death of each of the co-owners, the co-owners’ will or trust will control and they get to decide where their 1/3 goes. 

Your Will might say that your third is going to your children. That’s perfectly fine. It will go to your children. 

Your first partner might decide that their third will go to a charity. That will also be the case. Their third will go to their preferred charity. 

Joint Tenancy

Joint Tenancy or Community Property with Right of Survivorship is a completely different ballgame. Joint tenants must obtain equal shares of the property. This must be done on the same deed at the same time. You can’t be a 1% joint tenant with one other person. Each of you will have to be a 50% owner. If there are 5 owners, each will own 20%. 

But, there’s more. 

Your will or trust will not control as to where you want this joint tenancy property to go after you die. It will, almost always, go to the other joint tenants listed on the deed. So, if a property was owned by 5 joint tenants and someone dies, now each owner will own 25% of the property. They all divide it equally. 

Whoever is on title with you will end up inheriting it all. No matter whether there is a will or a trust that says otherwise. 

The joint tenancy agreement is above the will or the trust. So, be careful and make sure to have the right designation on your deed. 

Just remember that each time you transfer property and mess around with the title, you give the tax assessor’s office an opportunity to reassess your taxes, which could result in a big problem.

In another video, I warn you about the dangers of joint tenancy. 

Be careful not to just change the title, especially when in joint tenancy. There are specific rules you have to follow in that regard. 

Need help sorting out the titles on your tenancy or need advice pertaining to joint tenancy/tenancy in common? Sign up for a strategy session today.