In Real Estate Law, when more than one person owns and resides in a property at the same time, they are said to be either Tenant in Common or Joint Tenants. The exact type of tenancy along with any additional terms, conditions and provisions are spelled out as binding items in the title deed of the property.

It is important that people in such arrangements seek legal counsel to navigate around some of the potential scenarios that could occur upon death or transfer of ownership.

Tenants in Common

People residing in the same property with separate rights to ownership are said to be tenants in common. Tenants in common can have different ownership stakes to the property. For example, three tenants in common may have 50%, 30% and 20% ownership stakes, respectively. Tenants in common can join and leave the arrangement at any time with the consent of the other tenants in the arrangement.

Although tenants in common share portions of the ownership of a property, they are not automatically assigned to any physical boundaries within the property. In other words, they own a portion of the title of the property yet, unless otherwise specified in the title, have full use of the property as long as they are tenants in it.

Tenancy in common ends when a partition action is filed – allowing one of the tenants in common to sell their stake. If the second to last person sells their stake to the remaining tenant, the tenancy in common ends and a single tenancy arrangement begins.

Joint Tenants

Joint Tenants are those living in the same house with the same right of ownership. Joint tenants always have equal stakes in a property’s title and can, like tenants in common, sell their stake or a portion thereof. If this occurs, then all parties including the new tenant form a tenants in common relationship for the purposes of determining ownership. In Florida, married couples are automatically said to be joint tenants in their property of residence. One concept that applies to joint tenancy, and not to tenants in common, is right of survivorship.

Right of Survivorship

Under Florida law, when you add the words “right of survivorship” to a joint tenancy, that means full title to the real estate goes to the owner that survives the death of the other(s). The “survivor” of the joint owners automatically owns 100% of the asset when the other joint owner (or owners) passes away. A tenant relationship subject to these terms would be called a Joint Tenancy with Right of Survival (JTWROS). Note that tenants in common have no automatic rights of survivorship. This means that if one of the tenants in common dies, the remaining tenant(s) keep their same shares of the property and the deceased’s portion goes to their estate. Tenants in common can only change this arrangement by designating it otherwise in their will.

Unmarried Pitfalls to Avoid

Couples who are unmarried in Florida are not automatically considered to be joint tenants. If no formal ownership and tenancy arrangement is made, then the non-owner partner is simply allowing the non-owner partner to be living there under license. This causes tax and other complications that are best avoided.

If only one member of an unmarried couple owns the home and he or she allows the other party to live there rent-free, the IRS may consider the arrangement to be a gift to the non-paying partner. If the value of the “gift” exceeds $10,000 a year, or the equivalent of about $833 in rent per month, the recipient would have to pay gift taxes on their tenancy! This tax complication can be avoided, however, if the homeowner charges the other partner rent and keeps accurate books and records reflecting the payments.

Another complication results from an unmarried partner who is the sole homeowner dying. If the owner of a fully owned house dies then the whole house goes to his or her estate – leaving the partner without the property. In a similar arrangement, if the unmarried couple lived as tenants in common and then one of them dies, the deceased’s portion of the property goes directly to their estate upon their death. If the intention is for the surviving partner to own the house outright, then a JTWROS arrangement should be drafted by an experienced real estate and estate planning attorney.

“One concept that applies to joint tenancy, and not to tenants in common, is right of survivorship.”

The Importance of Counsel

To avoid confusion, loss and disappointment, it is essential that any jointly owned property arrangements are made in consultation with an experienced Real Estate and Estate Planning attorney. Are you currently in or expect to be part of a joint tenancy or tenancy in common? Are you the unmarried partner living together with a partner who owns a property outright? If so, contact the Real Estate Law professionals at South Florida Law today on (954) 900-8885 or click here to reach out via our contact form for a free consultation.