Joint tenancy and tenancy in common are two ways that real estate can be owned by more than one person. To understand how real estate is owned, it is first important to understand the terms “deed” and “title.”
- Title is the intangible concept of legal ownership. Having title to real estate means you own the property and control certain rights associated with it.
- A deed is the document that describes how real estate is owned. It is the formal document used to transfer ownership of real estate from one person to another. Owners of real estate must sign a deed when title is transferred. Deeds are publicly recorded as evidence that a real estate transfer has occurred.
A deed’s wording describes how title is held. A deed for real estate owned by more than one person will often specify whether it is held in joint tenancy or tenancy in common.
What is Joint Tenancy?
Joint tenancy is when two or more people hold title to real estate together in equal, undivided shares.
When a joint tenant dies, that person’s “share” of the real estate automatically passes to the surviving joint tenant or joint tenants.
This transfer occurs regardless of any instructions in the deceased tenant’s will regarding the transfer of the real estate. This is called the “right of survivorship.” Jointly held real estate is generally not subject to probate administration.
In a joint tenancy, all owners share responsibility for management of the real estate, rights to income from the real estate, and financial obligations related to the real estate.
What is Tenancy in Common?
Tenancy in common is when two or more people own individual shares in real estate. If one owner dies, that owner’s share of the real estate does not automatically pass to the remaining tenant or tenants in common. Instead, it passes through the deceased owner’s estate. Unlike joint tenancy, real estate held by tenants in common does not include a right of survivorship.
How Can You Tell if Real Estate Is Owned in Joint Tenancy or as Tenants in Common?
A deed will typically contain a descriptor such as “joint tenants with full rights of survivorship” or “tenants in common” after the names of the titleholders. If no descriptor is shown, Iowa law generally presumes that a conveyance to two or more unmarried persons creates a tenancy in common unless a joint tenancy is expressly declared. However, for deeds executed on or after January 1, 2015, transfers to a married couple are presumed to establish a joint tenancy.
How title to real estate is held is an important part of an estate plan, and updating a deed can be a simple step that your attorney can help with. Changing ownership of real estate can have financial and tax implications. Consult your attorney if you have questions about how your real estate is titled and which option is best for you.