Real property is often purchased by or conveyed to multiple owners – such as when a married couple buys a home. When such a transaction occurs, there are a number of different ownership forms that can be selected from (by the purchasers, in the case of real estate transactions, or by the testator when he or she is drafting a will containing a devise of real property), each of which will affect the rights of the individuals in the ownership group with respect to the property.
Married couples ordinarily take ownership of property using a form known as “tenancy by the entirety.” In a tenancy by the entirety, spouses each have a joint interest in the whole of the property with rights of survivorship (meaning that if one spouse dies, the property automatically passes to the surviving spouse by law, regardless of whether a will exists that provides for such transfer or not). Under NY law (EPTL 6-2.2(b)), married couples taking title to property do so as tenants by the entirety automatically unless otherwise specified in the deed.
Another form of co-ownership is known as the “joint tenancy.” The principal different between a joint tenancy and a tenancy by the entirety is simply that joint tenants are not married. Like a tenancy by the entirety, a joint tenancy confers rights of survivorship upon each of the joint tenants such that upon the death of one joint tenant, his or her interest in the property automatically vests in the surviving joint tenants regardless of the existence of a will. This form of ownership is often selected by non-married relatives or other persons with a sufficiently close relationship to each other such that they intend to always maintain ownership of the property within the original ownership group during the lives of the original owners.
The last common form of joint property ownership is known as a “tenancy in common.” Tenants in common are deemed to each have an undivided proportional interest in the property (i.e., if there are 3 joint tenants, each has a 1/3 interest in the whole piece of property). Unlike the two forms of ownership described above, tenants in common do not have rights of survivorship. The practical effect of this difference is that upon his or her death, the interest owned by a tenant in common passes according to the provisions of a will or the laws of intestacy (if no will exists). In other words, ownership of the tenant in common’s proportional share may or may not remain with the original ownership group at the time of his or her death. Tenants in common may also separately convey their interests to while alive to parties outside the original ownership group, although other laws or documents executed amongst the parties may complicate such transfers. Because a tenancy in common creates the possibility of more fluid ownership transfers outside the original ownership group, it is probably the least commonly selected form of ownership of the three discussed in this article. A group might select a tenancy in common if, for example, it is comprised of a group of friends making a business investment who contemplate separately selling their interest at a later date or conveying such interest at a later date pursuant to a will rather than to their co-owners.