Similarities Between TIC and JTWROS Ownership

Both tenancy in common and joint tenancy give each of you an "undivided interest" in the property, meaning you can both use and enjoy the entire property. If one of you wanted to sell, that person couldn't simply divide the property in half and sell it, but would instead have to sell his or her tenancy or interest in the property. The buyer would gain the same rights as the seller had. And if you're buying a second home or investment property, you'd both be entitled to rental income from the entire property in proportion to your ownership share.

Create a Co-Ownership Agreement

Talk is cheap, and what's worse, easily forgotten later. That's why you need to draft and sign a co-ownership agreement, to help head off confusion or misinterpretation down the road.

The most challenging part of drafting a co-ownership agreement is anticipating issues while everything looks rosy. Most people enter into a partnership with the friendliest of intentions, thinking they can work out any unforeseen questions later. But with big dollars and possibly your leisure or retirement time at stake, fundamental disagreements can arise and can be tough to work out.

Co-ownership agreements can range from short to lengthy. The agreement should at least address the issues discussed below.

Who Owns What Percentage?

Clarifying what percentage each of you will own is especially important in case one of you later dies or decides to sell your interest.

This decision is easy if you take title as joint tenants with right of survivorship (JTWROS). You'd normally divide your interest into equal parts, such as 50/50 if there are two of you.

If you take title as tenants in common (TIC), however, you don't need to divide your interests 50/50, nor even on the basis of how much money each of you puts in. For example, the two of you might decide that one will receive a greater percentage based on having agreed to manage upkeep on the property. Another possibility is that one co-owner contributes less for the down payment.