Tenants in Common Agreement

A tenants in common agreement (also known as a TIC agreement) is a contract where two or more people who have ownership interests in a particular real estate property set out their general legal rights and obligations in respect of that property, as well as terms relating to the management of the property. The agreement can outline what percentage of legal partition each tenant owns, or who will inherit their individual percentages upon the death of any of the co-owners. In simple terms, a TIC agreement is a kind of partnership in real estate ownership.

Since a tenants in common ownership model can mean that the parties do not hold equal shares in the property, and the overall value of the property will not automatic be divided equally among the co-owners, this can be useful where one owner has a greater stake in the property, such as:

When you have a tenancy in common, it means that the property ownership is shared between at least two people. 

• Tenants in common do not own separate parts of the physical property. Rather, they own separate interests in the property.
• Tenants in common do not have to be related. They can be family, a couple, or just friends. They can also be two partners launching a business venture.
• Each owner has equal rights to the entire property, but they own different partitions of the shares.
• Percentages can be shared equally between the co-owners, or one owner can own a greater percentage of ownership than the others. You and the other owners need to determine your respective ownership shares during the process of purchasing the property.
• Not all tenants have to live on the property.
• You cannot rent, gift, or even sell your shares in the property.
• If one tenant dies, their interest will pass on to their heir through their estate. For example, it may pass on to the deceased’s spouse or other such beneficiaries.
• Tenants can agree to have contingency funds to pay for common expenses, to share expenses such as taxes according to their individual percentages, or to pay for expenses in agreed proportions. 

People have different reasons for entering into tenancy in common arrangements. Perhaps they can’t afford to purchase the property on their own, or the structure will lead to an enhancement in their buying and selling power. Entering into this type of arrangement will allow for more choice because the cost is lower for each individual buyer since they can pool their funds.

Some people create a TIC agreement because it allows them to sell a certain share of the property to different buyers at a given time. The total sale price is typically more than what they would have sold the entire property for to a single buyer. The type of arrangement you enter into entirely depends on you and your reason for purchasing a real estate property. 

A tenancy in common is where two or more people own an asset as a group but none of these owners have any survivorship rights. This is where an owner dies and their share passes to the other surviving owner or multiple owners.

Since this is not the case for a tenancy in common, the result is that the entire asset does not automatically pass onto the surviving owner/s. Instead, an asset, such as a home, is split between tenants who each own their share, which passes to that tenant’s estate when they die. Typically, tenants split up ownership on a 50-50 basis, but they could also split it 60-40, 70-30, 80-20, or any other way they choose.

In a joint tenancy, you and your spouse or common-law partner own assets as if you were one person. As a result, both of you have equal rights over the asset, as well as equal obligations.

The concept of tenancy by entirety (TBE) refers to married couples holding an equal interest in property and survivorship rights, which means their property is not subject to probate. It is not 50/50 ownership; each spouse owns 100% of the property.

You must communicate with the other parties you intend to purchase the property with before drafting a TIC agreement. This will help you decide whether or not this co-ownership structure is right for you before you go ahead with the purchase.

The share held by each co-owner, along with other factors, determine tenants' percentages. Using the TIC agreement template to guide you through this process, you can decide on other major terms, such as what happens if one co-owner sells or if the property increases in value. Including an indemnification clause in your agreement protects your co-owners from liability in certain situations. The tenancy in common agreement template form is easy to customize and printable, so you can just fill in the blank parts on Lawrina and download a complete template.

Tenancy in common agreement forms must include the following provisions:

If you wish to end your fixed-term joint tenancy, you must simply get the approval of your landlord and consent from the other tenants. When you end your tenancy, it ends for everyone, as mentioned in the agreement. It is necessary to get all tenants' consent to end a joint tenancy with a break clause unless your agreement states otherwise.

A joint tenancy agreement and a tenancy in common agreement are structurally different, including the differences set out below:

Regardless of how you decide to structure your ownership of the property, there will be tax implications. As joint tenants, you are equally liable for the property's taxes. 

The implication is that co-tenants are jointly liable for the taxes, meaning that they are each liable for the full amount regardless of their ownership percentage. If this is the case, the co-tenant can deduct the amount they contributed. If this is not the position in the relevant tax jurisdiction, then the applicable state laws will apply. The tenants can pay and deduct taxes up to the amount of their percentage of ownership, if they so decide.

TIC agreements outline the rights, obligations, and management terms of property owned by two or more people. A TIC agreement can help individuals purchase property at a lower price since many people choose to share real estate costs. Tenants may choose to make a tenant in common agreement example to specify what their legal ownership percentage each of them will have or who will inherit their share of ownership on their death. This tenancy in common agreement sample by Lawrina is a helpful tool to protect your property entitlements.

Using a joint tenancy agreement is a smarter option when purchasing a home with a spouse or partner. This way, if one of you passes away, the other keeps the property. Other benefits of a joint tenancy include:

Property law can have particular rules about the language required to deal with certain types of homeownership. Below are the state laws across the U.S. regulating tenancy-in-common and joint tenancy relations.