The Tenancy in Common

Sorry for the ranting in the last article; back to property.

There can be multiple persons owning an interest in real property at the same time. This is referred to as 'fragmentation of ownership.' In Michigan, there are three principal ways is which title to real property may be held: (1) the tenancy in common; (2) the joint tenancy, and (3) the tenancy by the entirety. In this article I will address the tenancy in common. The attorney representing a purchaser has to be astute to the form of ownership their client is seeking. Sometimes, a poorly drafted deed may produce a tenancy that the parties never intended. This article, and the subsequent articles on fragmented ownership, will clarify what these tenancies are and how they are properly created by deed.

The Tenancy In Common

A typical tenancy in common recites the grantee line as follows: Owner conveys to Bill Smith and Bob Jones. There is no additional language used. However, the grantee line may also be recited as follows: Owner conveys to Bill Smith and Bob Jones, as tenants in common.

The tenancy in common is created in two or more grantees. Each tenant in common has the right to occupy and use the premises on an equal footing with the other tenants in common. It is also assumed that each tenant in common owns an equal share in the property; however, the parties are free to apportion different interests to different owners. For instance, in the above example, title can be held by Bill Smith, as to an undivided 75% interest, and Bob Jones, as to an undivided 25% interest. It is up to the parties to decide.

Each tenant in common is free to convey its interest at any time. For example, Bill Smith may convey his interest to Susan Thomas. This would create title held by Bob Jones and Susan Thomas. It simply replaces one person for another. (NOTE: The spouse of Bill Smith, if any, would need to sign the deed to Susan Thomas to release her dower interest in the property). Dower will be the topic of a later article.

When an existing tenant in common dies, that interest in the property passes to his or her estate. For instance, using Bill Smith and Bob Jones as the parties, if Bill Smith were to die, the new state of title would by held by Bob Jones and The Estate of Bill Smith, deceased.

In its basic form, the tenancy in common is a very simple form of ownership. It also has its drawbacks: (1) the co-owners may frequently change, (2) judgments may attach to a co-owners interest, (3) a bankrupt co-owners interest, and yours as well, may be sold in bankruptcy proceedings, (4) divorce or death of a co-owner will disrupt the tenancy and may tie up free transferability of the property. These are just four examples of a laundry list of possible complications.

Important: Remember that the spouse of every male tenant in common must sign to bar dower if the male co-tenant is selling or mortgaging.

The next article will concern the joint tenancy.

-los lonely boy-