What To Know Before Entering Into A Tenants In Common Partnership
It is not unheard of for more than one party to own property or a parcel of land together. In fact, this is quite common for couples who envision a life together even before marriage. Let's face it, buying property is expensive and might not be in the cards for everyone; however, when two or more parties pool their resources, it becomes possible to start climbing the property ownership ladder. The good news is that there are three different ways to approach property ownership by two or more parties, for instance, tenancy by the entirety, joint tenancy, and tenants in common, per the Cornell Law School.
Tenants in common (TIC), for this case, is one of those methods that are more flexible and would be ideal if either party wants to retain a certain level of financial independence. However, while this is true, this type of partnership has legal implications that you need to know beforehand. With that in mind, here are some things you need to be aware of before entering this type of property ownership partnership.
How does tenants in common partnership work?
It is worth mentioning that the laws of TIC are not the same in all states; however, many general rules are involved. Bradd S. Robbins from Willinger, Willinger & Bucci, P.C., via U.S.News, describes TIC as a legal arrangement for equal or unequal property ownership by more than one person. In this alliance, each party has an equal right to the whole property; no single member can claim ownership of a specific part of the said holding.
Other than that, an individual can join in long after the agreement is made and other members have already entered into the partnership. The beauty of this type of agreement is that there is no right to survivorship. This means that, on the demise of one member, the rights to the property do not go to the remaining partners; instead, the shares are transferred to the next of kin as directed by the will.
Dissolving tenants in common partnership
The TIC agreement doesn't need to be permanent; there are legal provisions for dissolving this partnership amicably. Since everyone has a right to every part of the property, no party can deny the other access in the event of a dispute. Usually, the tenants have an opportunity to settle this issue out of court; one of the options to explore is if one or more members choose to buy out the rest to dissolve the agreements, notes HG Legal Resources. However, if there is no solution out of court, a partition action is often the next step.
This action will involve the court, and the property will be subdivided into parts owned and managed by each individual. It is worth pointing out that this process might be initiated by the members involved or ordered by the court. Nonetheless, the court doesn't compel any party to sell their piece of the property. If the members still cannot get along well, the property might be put up for sale, and the proceeds divided according to share contribution among all the parties, according to U.S.News.