At least once a week a new client who owns real property with someone else comes to my office with a question about his rights and obligations with respect to his joint ownership of the property. Oftentimes the questions arise because the owners do not see eye to eye as to who is responsible for paying the carrying costs on the property (real estate taxes, insurance, maintenance and repairs) or how the proceeds will be divided in the event the property is sold. Since joint ownership of property can take a number of forms, each conferring different rights and obligations upon the owners, the answers to these questions require an understanding of the different ways in which people can jointly own property.

Individuals who are not married to each other can own real property as tenants-in-common or as joint tenants with right of survivorship. In addition, spouses can own real property as tenants-in-the-entirety.

Owners who are tenants-in-common each own a share of the real property. They have the right to sell or transfer their own share to whoever they want without the consent of the other owners, either during their lifetime or by Will. Tenants-in-common need not own equal interests in the property. For example, if three people own a piece of property as tenants-in-common, each may have a one-third interest in the property but, one may have a one-half interest while the others each have a one-quarter interest. Since the ownership interests may not be the same for each tenant-in-common, it is important that the percentage of the property owned by each tenant-in-common is set forth on the deed. It is also important that tenants-in-common set forth in writing what their obligations are with respect to the carrying costs associated with the property. Generally each owner’s share of the carrying costs is the same as his ownership interest in the property. For example, if four people each own 25% of a property, they are each responsible for paying 25% of the carrying costs. However, the owners may agree to a different arrangements, especially if not all of the owners reside or make use of the property. To avoid confusion and disputes, a detailed agreement setting forth the rights and obligations for each tenant-in-common should be signed by all of the owners. In addition, detailed records should be kept of contributions made by each owner toward the cost of owning the property.

Unlike tenants-in-common, when more than one person owns property as joint tenants with right of survivorship, it is assumed that each owner has an equal ownership interest in the property. Joint tenants are not free to sell or otherwise transfer their interest in the property to a third party without consent of the other joint tenant owners. In addition, a joint tenant with right of survivorship cannot leave her share of the property to someone in a Will. That is because the right of survivorship essentially guarantees that the “last person standing” is the sole owner of the entire property. For example, if there are three joint tenants and one dies, the two remaining joint tenants automatically become the sole owners of the entire property. Upon the death of one of the remaining joint tenants, the survivor becomes the sole owner of the entire property. This is true even if the other joint tenants died with Wills explicitly leaving their interests in the property to a third party. Like tenants-in-common, joint tenants should set forth in writing what their obligations are with respect to the carrying costs of the property and how the proceeds from the sale of the property will be divided if not equally.

Although anyone can own property as tenants-in-common or joint tenants, only spouses, both traditional and same sex, can own property as tenants-by-the-entirety. In fact, in New York, even if the deed does not specifically indicate that ownership is by tenants-in-the-entirety, real property is assumed to be held by spouses as tenants-in-the-entirety absent language in the deed to the contrary. Even if a deed simply provides that the owners are “John Doe and Jane Doe, his wife,” it is presumed that John and Jane are tenants-in-the-entirety. If they wish to hold the property as tenants-in-common, the deed must specify that they are tenants-in-common and must indicate the size of each owner’s interest in the property. The rights and responsibilities associated with tenants-in-the-entirety are identical to those associated the joint tenancy with the right of survivorship. Like joint tenants with right of survivorship, tenants-by-the-entirety cannot dispose of their share as they please. Rather, upon the death of the first spouse, the surviving spouse automatically owns the entire property. A divorce will sever a tenancy by the entirety, resulting in the owners being tenants-in-common.

Because of complexities associated with jointly held property and the potential for unintended consequences, it is good idea to consult an attorney when purchasing property with others to insure that you understand your rights and obligations and have taken the steps necessary to protect your interests.

This article first appeared in the October 29, 2014 issue of the Times Beacon Newspapers.

Linda M. Toga of The Law Offices of Linda M. Toga, P.C. is an East Setauket,New York attorney with a general law practice focusing on estate planning, real estate, marital planning, small business services and litigation.