In Colorado, when there is more than one buyer or entity purchasing real property, the buyer(s) can specify how they will hold title. On the Colorado approved “Contract to Buy and Sell Real Estate” in section 2.1 buyers have the option to take “title to the Property described below as Joint Tenants, Tenants in Common or Other. Below I will spell out the main differences between joint tenants and tenants in common.
Joint tenancy is characterized by right of survivorship. When a property is owned by joint tenants, and one of the owners dies, the interest of the deceased owner automatically gets transferred to the remaining surviving owners. For example, if five joint tenants own a house together and one of them dies, each of the four remaining joint tenants ends up with 1/4 share of the property. Regardless of what the deceased owners will says. In 2008 the laws were changed to allow for unequal interests in the property by the owners. For example, instead of an elderly parent owning a 1/2 share along with their child to whom they would like to leave the house, the ownership could be split 99% / 1%. When the parent dies the child would then own 100% interest in the property.
Joint tenancy is most often used by married couples or multi-generational families who own real estate together.
Tenants in Common
There are three main differentiating characteristics of tenants in common ownership. The first is, like joint tenancy the ownership interest can be split up into different percentages. For example Owner A can own 60%, Owner B 15% and Owner C 15%. The second feature is that the mix of owners and the percentage of ownership can be changed at any time. Owners can be added or subtracted at any time by mutual execution of legal documents. Tenants in common doesn’t have rights of survivorship. If in our example Owner A dies, his 60% interest would go to his estate unless his will specifies that his interest shall be split between the remaining parties.
Tenants in common is most often used by unrelated parties such as friends, un-married couples, business partners or family members where one person is putting down more assets than the other.
This article isn’t intended to give legal advice. Please seek professional guidance when making legal decisions.