Legal Definitions - Tenancy in Common

Tenancy in Common (TIC)

Tenancy in Common (TIC) is a form of property co-ownership where two or more individuals hold an interest in the same property. It is distinct from other forms of co-ownership primarily because it does not include a "right of survivorship." This means that when one owner passes away, their share of the property does not automatically transfer to the surviving co-owners. Instead, it becomes part of the deceased owner's estate and is distributed according to their will or, if there is no will, by the laws of inheritance.

Key characteristics of a Tenancy in Common include:

• Unequal Shares: Owners can hold different percentages of ownership in the property. For instance, one owner might have a 60% share, while another has 40%.
• Independent Transferability: Each owner is free to sell, mortgage, gift, or bequeath their individual share of the property without needing permission from the other co-owners.
• Right to Possess the Whole: Despite potentially owning unequal shares, every tenant in common has the right to use and occupy the entire property, not just a portion corresponding to their ownership percentage.

Examples:

• Example 1: The Inherited Family Cabin

  Three adult siblings, Alice, Ben, and Clara, inherit a family cabin from their parents. Their parents' will specifies that the cabin is to be held by them as tenants in common. Alice contributed more to the cabin's upkeep over the years, so her parents left her a 50% share, while Ben and Clara each received a 25% share.

  Explanation: This arrangement is a tenancy in common because the siblings hold unequal shares (50%, 25%, 25%). Crucially, if Alice were to pass away, her 50% share would not automatically go to Ben and Clara. Instead, it would be distributed according to Alice's own will or, if she had no will, by the laws of inheritance to her heirs. Ben and Clara would still retain their 25% shares, and all three (or their heirs) would continue to have the right to use the entire cabin.

• Example 2: The Co-Owned Rental Duplex

  Two friends, David and Emily, decide to invest in a rental duplex together. David contributes 70% of the down payment and Emily contributes 30%. They agree to own the property as tenants in common, reflecting their different financial contributions.

  Explanation: This scenario illustrates a tenancy in common because David and Emily own unequal shares (70% and 30%). Despite this, both David and Emily have the right to access and manage the entire duplex. If David later decides to sell his 70% share, he can do so independently, without needing Emily's permission, and his buyer would step into his place as a tenant in common with Emily. Similarly, if Emily were to pass away, her 30% share would go to her designated beneficiaries, not automatically to David.

• Example 3: The Shared Business Property

  A small business, owned by three partners — Frank, Grace, and Henry — purchases a commercial office building to house their operations. Frank owns 40% of the business, Grace owns 35%, and Henry owns 25%. They decide to hold the property as tenants in common, mirroring their business ownership percentages.

  Explanation: This situation demonstrates a tenancy in common due to the unequal ownership shares among Frank, Grace, and Henry. Each partner has the right to use the entire office building for business operations. If Henry decides to retire, he can sell or transfer his 25% share of the property to a new partner or another entity without requiring the consent of Frank or Grace. Furthermore, if Grace were to die, her 35% share of the property would pass to her estate or heirs, not automatically to Frank and Henry, allowing her family to benefit from her investment.