Want to Share Property Ownership? Here's Why Tenancy in Common Might Be Your Best Option

When multiple people decide to buy property together, the legal structure matters more than most realize. There are several ways to establish joint ownership, and one increasingly popular arrangement is tenancy in common. Unlike other co-ownership models, this structure offers flexibility and protection for each owner’s individual interests.

Understanding How Tenancy in Common Works

Imagine two friends purchasing an investment property, or a couple where one person contributes significantly more capital than the other. These scenarios highlight why tenancy in common exists as a distinct legal option.

In a tenancy in common arrangement, two or more individuals can own a property—whether residential or commercial—without having to be married or even related. What makes this structure unique is the ownership flexibility. Owners don’t need equal shares. One person might own 60% while another owns 40%, or they could split it any other way they agree upon. The specific percentages and terms are documented in the property deed or a custom contract between parties.

Unlike some other ownership structures that are fixed at purchase, a tenancy in common can be modified after creation. Owners can add or remove members, adjust ownership percentages, sell their portion, or borrow against their share—something not possible with all co-ownership arrangements.

Why Tenancy in Common Solves Real Problems

Consider a married couple buying a home together. One spouse inherits $200,000 from family and contributes it toward the purchase, while the other contributes $50,000 from savings. With a tenancy in common structure, they can legally establish that the first spouse owns 80% and the second owns 20%. If they later divorce, this documentation prevents disputes about fair division.

Here’s another scenario: a divorce happens, and a couple previously held property in a different joint ownership structure. They can shift into tenancy in common, allowing each person to name their own beneficiaries and maintain separate control over their stake in the property.

Two unrelated business partners might also use tenancy in common to ensure that when one passes away, their heirs inherit their ownership share—rather than it automatically transferring to the surviving partner.

What Happens to the Property When Someone Dies?

This is where tenancy in common differs significantly from other ownership models. When a tenant in common dies, their share doesn’t automatically pass to the other owners. Instead, it becomes part of their personal estate and transfers to whoever they designated as beneficiaries in their will, or to their heirs according to state law.

The surviving co-owner’s share remains theirs, but the deceased owner’s portion likely enters probate court. This process can be lengthy and expensive, and the property becomes entangled in the estate settlement. Owners considering tenancy in common should factor this into their decision, as probate can take months or even years.

How Tenancy in Common Compares to Other Ownership Structures

Three main options exist for co-owning property: joint tenancy, tenancy by the entirety, and tenancy in common. Each has distinct characteristics.

Joint Tenancy typically limits ownership to two people who must hold equal shares. When one owner dies, the survivor automatically inherits the entire property—no probate involved. However, you can’t modify the arrangement without selling the property, getting proceeds distributed, and repurchasing under new terms.

Tenancy by the Entirety is reserved exclusively for married couples, also with equal shares and automatic transfer to the surviving spouse upon death. Like joint tenancy, it can’t be easily changed, though couples can shift into tenancy in common if circumstances change.

Tenancy in Common stands apart because it allows unlimited owners, unequal share divisions, flexibility to modify the arrangement, and the ability to direct your share to chosen heirs. However, the trade-off is probate involvement when owners pass away.

If you prioritize flexibility, unequal ownership stakes, and control over inheritance—tenancy in common is often the right choice. If you want to avoid probate and prefer automatic transfer to surviving owners, joint tenancy might suit you better.

Making the Right Choice for Your Situation

Owning property with others requires clarity about your priorities. Are you concerned about fair representation of each person’s financial contribution? Do you want your share to pass to specific heirs rather than automatic co-owner transfer? Is the arrangement likely to change in the future?

A tenancy in common arrangement addresses these concerns effectively. It acknowledges that co-owners may have different stakes in the property and different intentions for what happens after they’re gone. This structure provides legal protection for each individual owner’s interests while keeping the arrangement flexible enough to adapt.

Given the complexity of property ownership and estate considerations, consulting with a financial or legal professional before settling on any arrangement is advisable. Each situation is unique, and the right structure depends on your specific circumstances and long-term goals.