Join our investing community

Tenants in Common

Discussion in 'Investing Glossary' started by Glossary, 27th Sep, 2006.

  1. Glossary

    Glossary Active Member

    12th Sep, 2006
    People or entities who own an asset together may own that asset as Tenants in Common or as Joint Tenants. The key difference between the two forms of ownership is the right of the survivors to the whole property.

    If the asset is held by two or more parties as tenants in common then each may deal with their separate interest under their will. Whereas, in the case of a joint tenancy if one joint tenant dies, the asset automatically passes to the other joint tenant/s and is not affected by provisions in a will.

    Whilst joint tenancies are always in equal shares, it is not uncommon for tenants in common to hold uneven interests e.g. one tenant may own 99% of the asset whilst the other tenant in common owns just 1%. In fact a split like that is often used by spouses to own their Main residence to provide asset protection whilst preserving the CGT free status of the home. The "at-risk" spouse will hold the 1% interest as tenant in common.

    See also: