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Residential or commercial property can be owned separately (sole ownership) or collectively (joint or typical ownership). For the most part, joint owners can be either co-tenants in common or joint tenants with the right of survivorship.

You can own residential or commercial property individually (sole ownership) or jointly (joint or typical ownership). In many cases, there are 2 methods to hold title with others. Joint owners can be one of either:

- Co-tenants in typical
- Joint occupants with the right of survivorship

The primary differences between these joint ownership types are:

- How they occur
- How they are damaged
- How the subject residential or commercial property can be divided and offered

Keep reading to explore these differences in higher information.

What Is a Concentrated Interest?

Before talking about specific types of joint ownership, it's practical to unpack the legal meaning of a concentrated interest. When two or more people own realty, each specific owns a share (interest) of the entire residential or commercial property.

Each owner's interest is said to be concentrated. Each owner has a right to use the whole physical residential or commercial property despite the fact that their abstract right to the residential or commercial property is portioned out amongst them.

To illustrate briefly, picture that 2 business partners own genuine residential or commercial property together. A warehouse, perhaps. The storage facility is physically undistracted, however the owners share the entire physical residential or commercial property as a whole. However, each partner may have a 50% interest, or one might have a 30% interest, and another has a 70% interest.

Each kind of joint residential or commercial property ownership has particular limitations on how to divide the residential or commercial property interest.

A tenancy in common may involve two or more owners. Each tenant in typical may own an equivalent share of the residential or commercial property, but there's no requirement for equal ownership. Four owners may each own a 25% interest, or their interests might break down as 10%, 20%, 30%, and 40%. Each co-tenant has an equal right to have, use, and delight in the residential or commercial property. The co-tenants are free to make alternative arrangements among themselves.

Each co-tenant might also easily sell their interest. Similarly, when a co-owner of the residential or commercial property dies, their share remains part of the decedent's estate. Thus, the decedent's personal agent can transfer the decedent's share as discussed in their will. Whoever receives the interest enter the previous co-tenant's shoes.

Further, the transfer of a co-tenant's interest might occur at any time. The owner change does not disrupt the other co-tenant's ownership status. Jointly owned residential or commercial property is presumed to be kept in an occupancy in common unless the residential or commercial property deed specifies otherwise.

A joint tenancy with right of survivorship (JTWROS), like an occupancy in typical, is a form of co-ownership. It may involve 2 or more owners. However, a JTWROS needs to abide by a number of constraints.

The Four Unities

A JTWROS should please the so-called Four Unities. They are as follows:

Unity of Time: Each joint tenant needs to take title of their share at the precise time.
Unity of Title: Each joint occupant must take ownership of their share through the same instrument (e.g., a residential or commercial property deed). The legal document must specifically state that it is producing a JTWROS. Otherwise, the file produces an occupancy in common by default. The specific development language varies by state.
Unity of Interest: Each joint occupant should have an equivalent interest. Two owners should each have a 50% interest. Four should each have a 25% interest, and so on.
Unity of Possession: Each joint renter needs to have a legal right to have, utilize, and take pleasure in the residential or commercial property equally. Unlike co-tenants in a tenancy in common, joint occupants can not change this arrangement.

Violation of any of the Four Unities ruins the joint occupancy. The joint occupancy would become a tenancy in common. In specific, note that the Unity of Time and Unity of Title run so the joint renters can not transfer their share without destroying the joint tenancy. Their ownership rights can not be offered, inherited, or otherwise moved.

Right of Survivorship

If one of two owners of residential or commercial property held in a JTWROS dies, ownership automatically transfers to the making it through owner. This is called a right of survivorship. The deceased owner's estate does not receive any share of the residential or commercial property. Unlike an occupancy in typical, a JTWROS co-owner can not transfer their interest in the residential or commercial property without ruining the JTWROS.

Does Either Avoid Probate?

Probate has 2 meanings. It refers to the legal process of inspecting whether a departed person's last will and testament stands and authentic. This occurs in probate court. Probate likewise refers to the general procedure of dispersing a decedent's estate.

Depending upon the estate's size, the probate procedure can be lengthy and costly. So, does an occupancy in typical or JTWROS prevent probate?

Tenancy in Common

Typically, a tenancy in typical will not prevent probate. A co-tenant's ownership interest remains part of their estate when they pass away. It needs to be distributed by will or according to state laws of intestate succession.

If you wish to keep the piece of residential or commercial property out of the probate procedure, you might transfer it out of an occupancy in typical and into a trust. Residential or commercial property in a trust does not belong to the person who supplies the residential or commercial property. Instead, the residential or commercial property belongs to the trust itself and, therefore, is not part of the individual's estate at the time of death.

Joint Tenancy with Right of Survivorship

By contrast, the ROS in a JTWROS usually makes sure that a joint renter's interest does prevent probate. When just one joint renter remains, that individual becomes the sole owner.

At the sole owner's death, their 100% share must be dispersed as part of their estate. Thus, the making it through owner does not prevent probate. Again, this can be prevented by transferring the interest into a trust.

By extension, one can envision a conceivable though unlikely situation in which all joint renters pass away at or near the same time (e.g., in a plane crash), making it difficult to identify who was the last making it through joint renter. In this case, each joint renter's share might pour into their estates and stop working to avoid probate.

Questions? A Local Attorney Can Help

Tenancies in typical have the advantage of versatility. Joint occupancies with right of survivorship have the benefit of permanence. Understanding the advantages and disadvantages of each ownership arrangement before entering one can help you avoid severe headaches. A local realty or estate planning lawyer can offer valuable legal suggestions concerning joint occupancy and which type would be best for you.