One of the most common questions we get is, what are the differences in types of ownership? We have provided explanations of the different ways people can own property in New York below.
Tenants in Common
When real estate is owned by more than one person as tenants in common each person (or corporation) is given a percentage of ownership, upon the death of an owner their share goes directly to their estate. As tenants in common each owner is entitled to transfer their share during their lifetime, without the consent of the other owners. When the deed is silent as to the form of ownership, it is presumed that the parties own as tenants in common.
Each owner is responsible for the payment of property taxes, liens, and repairs, but generally one owner pays the carrying costs of the property and is entitled to a contribution from the other owners in proportion to each owners undivided share.
If one of the owners wishes to have the property sold entirely, they can bring a partition action through the courts, which forces the sale of the property. Any party can however settle and buy-out the owner who wishes to sell.
Tenancy by the Entirety
This is a specific type of form of ownership as it can only be held by a married couple. For example, the deed would recited “John Smith and Mary Smith, husband and wife.” If the deed is silent as to the form of ownership between a married couple, the law presumes the couple is taking as tenants by the entirety. The married couple may choose to take under a different form of ownership, but this must be made expressly clear in the deed.
Under a tenancy by the entirety, each spouse owns 100% of the property, when one spouse dies the property is transferred to the surviving spouse free and clear of any encumbrances that were caused by the decedent spouse. For example, if a husband were to transfer his share and die first, the transferee would have no interest in the property as the wife would take the entire property free and clear. Furthermore, neither spouse can disinherit the other by leaving the property to someone else through a will.
Joint Tenants with Rights of Survivorship
This form of ownership transfers a co-owner’s share to the other owner upon their death. The deed must specify that the owners are taking “as joint tenants with rights of survivorship.” If the ownership interest between three or more joint tenants is unequal, the deceased owner’s share is divided equally between the surviving joint tenants respective of their interests.
While an interest in a joint tenancy cannot be devised (transferred by will) a joint tenant can convey all or part of their individual interest during their lifetime to a third party, however this will sever the joint tenancy, creating a tenancy in common.