What Is Joint Owned Property?
The joint owned property refers to an estate or equity jointly owned by more than two individuals or entities having rights of survivorship with the right of tenancy to the holders. It is mainly done to make the co-owners equal owners of the property in the task of owning and maintaining the property equally & making it financially beneficial.
Inheritance, marriage, and business partnership are the main reasons for co-ownership. In the marital status of such assets, each spouse can claim half of the total income from community property separately for tax purposes. Joint ownership is useful in properly maintaining a property. However, it becomes risky on many counts. It gets difficult to convert joint ownership into sole ownership.
Table of contents
- Joint owned property is defined as one with more than two ownerships with either equal or unequal share in the property, depending on the nature of ownership.
- It gets done to safeguard the property, help maintain it, and allow for easy property inheritance through the survivorship clause.
- There are four main types of joint owned properties – tenancy in common, community property, joint ownership, and tenancy by the entirety.
- Joint owned property type of ownership is risky when it involves selling the property by the court or tax authorities over the entire property by the co-owner or lien of the property.
Joint Owned Property Explained
Joint owned property means owning the title of an asset by more than two persons having the right to survivorship. In general, married couples buy assets mutually to ensure equal joint owned property rights to the asset. Businesses and individuals also buy properties for the business purpose under joint ownership. In addition, one can consider trust or community properties as joint ownership.
However, the nature and right to ownership of such an asset differ based on co-owned property rights and joint property ownership rights as – tenancy in common, community estate, mutual ownership, and tenancy by the entirety.
1. Tenancy In Common
This asset type can have unlimited co-owner with an unequal share in the property corresponding to their investment. The heirs get the ownership right as there is no right to survivorship entitled to the co-owners. This kind of property is available to all, like unmarried people.
2. Community Property
This asset type is prevalent in only nine American states for married couples. It is also sans automatic survivorship to the co-ownership.
3. Joint Ownership
One can also refer to this ownership type as joint tenancy with rights of survivorship (JTWROS), where each co-owner has equal ownership rights irrespective of the amount invested. The co-owners avoid probate due to its automatic right of survivorship. It is suitable for unmarried individuals.
4. Tenancy By The Entirety
This ownership type is the best way to transfer the joint owned property rights to the widowed spouse due to the inherent survivorship nature of the ownership. Therefore, one can consider the owners as a single entity under this type of mutually owned asset.
Moreover, the mutually owned asset comes into existence at the time of registration of the asset when the co-owners become joint owners. Also, while selling joint owned property, the co-owners can sell their share of the equity as per the nature of the mutually possessed estate. Nowadays, under the jointly owned property and care home fees, many elderly couples sell their homes and pay for the fee of the care homes.
Let us examine a joint owned estate example to understand the concept better.
Let us suppose Sam is a rich man who owns a property in New York City. He expects to marry in the following month. Therefore, he buys out jointly owned property with his future wife under the tenancy by the entirety.
Hence, the spouses will automatically receive survivorship without going for probate. The law will recognize them as a single financial entity. And if any one of the spouses dies, the law will then easily transfer the property to the other spouse.
Hence, two or more married or unmarried co-owners are eligible to hold the estate title as a joint tenant with survivorship rights. This ownership type avails equal rights to the property while the owners are living healthily. After the co-owner’s death, it gives survivorship right. So here, the wife gets equal shares due to the operation of the law. She will require no probate to do so.
Although the mutually owned estate has certain benefits but also poses some risks, as discussed here:
- The co-owners risk getting the estate out of their control. The law may do so if they are not spouses or relatives of a co-owned property owner.
- The property in joint ownership cannot go for a mortgage loan to fund its business as the co-owner may not agree.
- If an accident happens or failure to pay taxes for co-owners, the law may place a tax lien on the co-owned estate by the court or the tax authorities.
- In case of an ambiguous share of co-owners in the estate, asset ownership complications always arise after any co-owners die.
- If owners desire to change or add more names in the future to the estate title, they have to pay hefty attorney fees.
Hence, courts pursue exceptions in financial exploitations and frauds of the legally incompetent estate.
Frequently Asked Questions (FAQs)
It is possible to sell a jointly owned property by one owner if the buyer is willing to go ahead and buy the share of the property. However, the best method would be to get the property partitioned per the joint owners’ shareholding pattern and then sell it.
No, one cannot seize a joint property, but a lien can get marked on the share of the party that borrowed from the lender against the joint property. Moreover, when one eventually sells the joint property, the sale proceeds have to use to pay the creditor from the husband’s share.
No, a jointly owned property cannot be a part of an estate due to the right of survivorship. In other words, the property under joint tenancy gets barred from being listed on applying for an administration grant.
No, the jointly owned property does not have to get probated as it automatically passes to the survivors after the joint-owners death.
This article is a guide to What is Joint Owned Property and its meaning. We explain the nature and right to ownership of a jointly owned property, its risks, and example. You can also go through our recommended articles on corporate finance –