There are several ways that multiple owners can hold title to real estate. The most common forms of co-ownership are tenants in common, joint tenancy with rights of survivorship, and tenancy by the entirety. For a discussion of a fourth option—called a life estate—see What is a Life Estate?
Tenants in Common
When multiple owners hold title as tenants in common, each owner’s interest becomes part of his or her probate estate at that owner’s death. It does not pass automatically to the surviving owner or owners.
For example, if Peter and Paul own real estate as tenants in common and Peter dies first, Peter’s interest will not pass to Paul. Instead, it will pass to Peter’s probate estate. If Peter has a will, Peter’s interest will pass to whoever inherits under Peter’s will. If Peter does not have a will, the property will pass to Peter’s heirs under the intestacy laws of the state where the property is located.
If the parties do not intend for the property to pass automatically to the surviving owner(s) at an owner’s death, tenancy in common is the right form of co-ownership. It ensures that one co-owner’s interest passes to his heirs at death instead of passing to the surviving co-owner(s). But because the deceased owner’s interest becomes part of his or her estate, probate may be required to transfer the interest to the deceased owner’s heirs.
Joint Tenants with Rights of Survivorship
When multiple owners hold title as joint tenants with rights of survivorship (sometimes referred to by the acronym JTWROS), title will pass to the surviving owner or owners at death of one of the owners. Unlike a tenancy in common, the property does not pass through the deceased owner’s probate estate.
Joint tenancies are often used by married couples. For example, if Paul and Mary are married, they may decide to acquire title as joint tenants with right of survivorship. If Paul dies first, his interest will automatically pass to Mary upon his death. If Mary dies first, her interest will automatically pass to Paul. In either case, probate is not required at the first spouse’s death.
Most real estate attorneys assume that a husband and wife intend to take title as tenants by the entirety and will deed the property that way by default. But this may not match the intent of the married couples, especially if the spouses have children from a prior marriage. This can have the unintended effect of disinheriting the children from the prior marriage.
Tenancy by the Entirety
A tenancy by the entirety is a special form of joint ownership available only to spouses. It is very similar to a joint tenancy in that it provides each spouse a right of survivorship. On the first spouse’s death, the property will automatically pass to the surviving spouse. But there are often other benefits—such as creditor protection—that make tenancy by the entirety the preferred form of ownership between spouses if a right of survivorship is intended.