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Tenancy in Common – Defined

Dena Standley | November 16, 2022

People who undergo a Tenancy in Commmon arrangement ^^

Summary: Tenancy in Common is a legal arrangement where two or more parties share ownership of a real-estate property or land. Tenancy in Common can be the ideal way to own a property or home if you do not have enough money to buy it alone, but it also comes with risks. If you find yourself struggling to pay your share of a mortgage under a TIC contract because of other debts, use SoloSuit to fight off debt collectors.

Tenancy in Common (TIC) is a unique type of co-ownership in which two or more parties share equal or varying ownership rights of a commercial or residential property. If the co-owner dies, their share of the property goes to the beneficiary.

Further, each person's ownership interest in TIC can be sold at any time because the tenants in common may not have the same ownership interest at a similar period.

Tenancy in Common can be confused with the other three types of shared ownership. To help iron out their differences, here are some definitions:

  • Joint tenancy: The owners must have the same undivided interest in the property and must receive the interests at the same time and in the same deed. If one member dies, the interest goes to the other owner, not an heir.

  • Tenancy by entirety: Mostly available to married couples, this ownership agreement means the property in question cannot be sold without the consent of both parties.

  • Tenancy in severalty: Can also be referred to as sole ownership, where a single person owns the property.

To further help you understand Tenancy in Common, we will discuss how it works, the pros and cons, and how to dissolve it.

Understanding how Tenancy in Common works

Ideally, when you enter a Tenancy in Common ownership agreement, you first define the percentage of property each person owns, and it must be indicated in the property deed. Even though you may own a higher percentage of the property, your privileges and access to the property remain equal.

However, some co-owners may draft another contract that outlines how each party will use the property. Another feature of TIC is that you can include more people in the property ownership and change the TIC agreement.

As mentioned earlier, if a co-owner dies, the beneficiary or heir automatically receives the stake in the property. In special cases, the property can be redistributed to the other owners if specified in the TIC agreement.

Let’s explore an example of what this might look like.

Example: Ben, Bobby, and Brian bought a small commercial property at $200,000. Ben paid 50% of the money, while Bobby and Brian paid 25% each. Even though Ben spent more than his friends, they all had equal rights to use the property. Unfortunately, Brian passed away, and his son became the new owner. The son did not want to continue with the TIC and sold his share to Bobby.


Pros and cons of Tenancy in Common

Tenancy in Common can be the ideal way to own a property or home if you do not have enough money to buy it alone. In addition, splitting up the maintenance costs and other payments is also a cost-effective way of running the property. As you enjoy these benefits, there are also drawbacks to consider. The table below gives a breakdown of the pros and cons of TIC.

Pros and Cons of Tenancy in Common

Pros Cons
Own a fair share of a property with whatever funds you have Equal responsibility for all mortgage payments despite split ownership
Decide who inherits your share of the property No control over who enters the TIC agreement when co-owner dies
Flexibility of ownership (you can add or remove someone) A member can force the others to sell unwillingly
Can qualify for loans due to owning a property Mortgage non-payment of one party affects your credit score
Take a lower investment risk when you co-own Some lenders shy away from accepting TIC due to the complex paperwork involved
Allows you to build equity earlier—using limited funds Can be challenging to sell your share to potential buyers who dislike co-ownership

Non-payment of your mortgage is also a con that puts your ownership of the property at risk. An available option to help you deal with debt is to request your creditor to settle. For instance, you can settle your other debts and remain with the mortgage—which makes it more manageable after clearing the rest.

To learn more about how to settle a debt, check out this video:

How to dissolve Tenancy in Common

There are several ways you can terminate a Tenancy in Common contract, although the laws vary depending on the state. You can use the following options:

  • Unanimous agreement: Occurs when all co-owners agree to dispose of the property.
  • Court-ordered: If you disagree on the way forward, a court can order the property divided or sold and money shared out.
  • Ousting one party: You can forcefully remove one member through the courts but be prepared for a counter-lawsuit.
  • Sell your share: Giving up your interest is the easiest way to get out of a TIC.

Did you know you can settle a debt you’ve been sued for by selling your share of TIC property? In fact, you can often settle a debt for less than the original amount. If you’re being sued for debt, first, respond to the lawsuit with an Answer and then send a Debt Lawsuit Settlement Letter to move the settlement discussions out of court.

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