Tenants-in-Common vs Joint Tenants
Q - My sister and I are planning to buy a home for rental purposes. I need some clarification regarding the terms 'Joint Tenants' and Tenants-in-Common'. What would be best in our situation?
A - Joint Tenancy - Should your sister die, the property would then belong to you as the surviving joint tenant.
If you and 2 sisters were to purchase the rental home, upon the death of one sister, the home would belong to the 2 surviving sisters. Neither surviving sister could stipulate in their Will that the property should go to someone else. It is only the last surviver who can leave the property to someone else.
Tenants-in-Common - In this situation, each of you would own half the property. You could leave your half share to someone else through your Will.
If you purchased with 2 other sisters, all 3 of you could leave your 1/3 share to someone else in your Will upon death.
In most instances, a purchase by a married couple is set up as Joint Tenants. In your particular situation, it all depends whether you wish to leave the property to your sister upon death (Joint Tenancy) or, if you would like someone else, such as husband, to have your portion of the property (Tenants-in-Common).
The practical implication of Tenants-in-Common is that, should you wish to sell, you need the agreement of the other parties or you can only sell your portion. The question then becomes --Who wants to buy only a portion of a house?
When your lawyer is drawing up the documents, he will ask you whether you wish to draw it up as Joint Tenants or Tenants-in-Common. You can obtain further clarification at that time and then make your decision.
The above is not legal advice. Further clarification should be obtained from a lawyer.