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How Does Tennancy-in-Common Work?

What is Tenancy-in-Common?

The legal term tenancy-in-common refers to a condition of property ownership wherein each owner has full access to the property despite their co-ownership, yet retains the right to sell their portion of the property separately. Each tenant-in-common is also entitled to a pro-rata share of any income generated by the property, such as rent.

Tenancy-in-common issues often relate to spouses in divorce, cosigners, apartment, condominium, office buildings, or timeshares.

For example, in the case of a divorce where the spouses are co-owners of a property, each spouse is entitled to sell the individual share of the property independently of the other.

For practical reasons, one either buys out the ownership interest of the other, or the property is sold in its entirety with the proceeds being split. On the other hand, each unit in a condominium can be easily be sold individually.



The laws of tenancy-in-common rose out of an American twist on British common law, which treated co-ownership as joint tenancy. In the British system, partial ownership interests were not separable, and the result was that property changed hands less often and was difficult for creditors to collect.

Early American society despised the institutions that promoted land aristocracy. Tenancy-in-common promoted the use of land as a commodity, supporting an active real estate market, and that tended to thwart primogeniture.




Financing and Control

The tenancy-in-common principle allows individual co-owners to obtain separate financing for their fractional ownership. The loan in such a case is secured only by the co-owner’s share of the property, upon which the lender can foreclose in the case of default.

Tenancy-in-common wraparounds are quite common in commercial real estate in which an original owner remains responsible for a senior mortgage while collecting on junior mortgages representing a tenancy-in-common share of the total property.

The creation of tenancy-in-common shares, however, gives owners control in proportion to their ownership interest, with a majority vote usually required for major decisions.


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