Colorado Real Estate Attorney: Tenancy Questions
When two or more people take title to real property in Colorado, they must decide how title will be held. Generally, there are two ways to accomplish this – the parties can take title as tenants in common or as joint tenants. It is very important to understand the difference between these two types of co-ownerships.
Tenancy in Common
A tenancy in common is a form of ownership in which each co-tenant owns a separate fractional share of undivided property. This means that each co-owner has the non-exclusive right to possession of the entire property. Each tenant in common holds a separate and distinct title, and is considered sole owner of his or her separate share. At the same time, each co-owner also has the right to mortgage, sell, or otherwise transfer his own interest in the property without the consent of the other owners. There is no limit to the number of tenants in common that may own a property, and the co-tenants may be individuals, partnerships, corporations, trusts, or other legal entities.
Upon the death of a co-tenant, the deceased co-owner’s interest passes to his heirs based on the person’s will or the operation of Colorado real estate law regarding how property is to be passed to heirs in the absence of a will.
Joint tenancy interests, on the other hand, must be specifically stated in the deed conveying the property from the grantor(s) to the grantee(s). In the absence of a clear designation that the grantees are taking as joint tenants, Colorado law will assume that the grantees have taken the property as tenants in common. Joint tenancy can only be created between individuals (as opposed to corporate entities), and upon the death of a joint tenant, their interest passes to the surviving joint tenants (as opposed to the deceased co-owner’s heirs). As a result, many married couples elect to hold property as joint tenants to achieve the result of having a surviving spouse take title to marital real estate without the need for initiating formal probate proceedings.
A joint tenancy between two persons will be severed if one of the joint tenants conveys his interest to a third party. The remaining owner and the new owner will hold the property as tenants in common. However, when property is held in joint tenancy by three or more joint tenants, a conveyance by one of them will destroy the joint tenancy only as to the grantor’s interest. The other remaining joint tenants will continue to hold property in joint tenancy between themselves, while the grantee holds his interest as a tenant in common with them.
It is strongly encouraged that you seek the advice of a real estate attorney in deciding which form of ownership will be best for your situation.
Eric L. Nesbitt, Esq.
Law Offices of Eric L. Nesbitt, PC
Nesbitt Law Offices Website