Understanding tenancy: The different ways to co-own real property

submitted by E. Garrett Gummer, III, Esquire –

When two or more individuals own real property, the relationship between the owners is very important.

The form of ownership of the property affects how property is transferred to someone else.

It is important to make sure you have the right form of ownership for your property.

Tenancy in common allows an owner the greatest flexibility to transfer the property as he or she wants.

Each co-tenant in a tenancy in common has an interest in the property which can be different, and he is free to transfer this interest during life or through a will.

Joint tenants, on the other hand, must have equal ownership interests in the property.  

If one of the joint tenants dies, his or her interest immediately ceases to exist and the remaining joint tenants own the entire property.

The advantage to joint tenancy is that it avoids having an owner’s interest probated upon his death.

A disadvantage to both joint tenancy and tenancy in common, however, is that creditors can attach the tenant’s property to satisfy a debt.

A third form of tenancy that is allowed in Pennsylvania, tenancy by the entirety, avoids this problem, but it is available only to married couples. One tenant cannot convey her interest on her own, unlike with the other tenancies.

Upon the death of one spouse, his interest automatically passes to the other spouse, and the creditors of one spouse cannot attach the property or force its sale to recover debts unless both spouses consent.

Creditors may place a lien on property held in tenancy by the entirety, but they are out of luck if the debtor dies before the other spouse, who will take ownership of the property free and clear of the debt.

Unmarried couples who buy property and subsequently marry should re-title the deed as tenants by the entirety to avail themselves of the greater protections this form of tenancy offers.

Contact your elder law attorney to find out which form of ownership is the right one for your circumstances.