House hunting can be overwhelming, and it’s not isolated to current challenging market conditions. Buyers have a lot of decisions to make. Location, price, square footage, amenities, re-sale value, and the commute to work are just a handful of the criteria you may be considering in your search. Which real estate agent will you choose to help you find the perfect house? Where will you go for financing or to purchase homeowner’s insurance? Which attorney will you trust to handle the contract and closing? 

These big decisions can have long-lasting consequences and will certainly have an impact on the overall buying experience. But aside from the obvious decisions, there are important questions that need to be considered when there are multiple buyers taking title to the property. What options are available when two or more buyers acquire an ownership interest together? What are the practical differences and legal consequences of each option? 

Tenants in Common (“TIC”) versus Joint Tenants with Rights of Survivorship (“JTWROS”) 

There are several ways that these types of ownership differ, but a good place to start when choosing between them is to consider how each disposes of property when one of the owners dies. If title is held as TIC, a decedent’s interest will pass to his heirs or in accordance with the provisions in his will. If title is held as JTWROS, a decedent’s interest will automatically pass to the surviving co-owner(s) at the time of his death. An owner holding title as a JTWROS cannot defeat the right of survivorship by attempting to gift the property to someone else in his will. 

Tenants-in-common can own unequal shares of the property. For example, Eion can own a 75% interest and Olivia can own a 25% interest. Not so with JTWROS. Each owner must have an equal interest in the property. Tenants in common can also hold different forms of ownership. For example, an owner may possess only a life estate interest while the co-owner possesses a remainder – meaning that title will pass to them upon the death of the life tenant. Again, this is not an option for JTWROS, where there must be unity of time, title, interest, and possession. These are referred to as the “four unities.” Ownership must be vested at the same time, by the same deed, with the same interest, each with the same right to possession. 

With TIC and JTWROS, the owners can sell or convey their title interest without the permission or knowledge of their co-owners. Imagine that Eion and Olivia purchase a property as JTWROS prior to their wedding. Sometime later, the engagement breaks off and Eion sells his interest to his friend Oscar, who happens to be Olivia’s supervisor at work. By conveying the property to Oscar, Eion destroys the right of survivorship and puts Olivia in a difficult position of owning the property with someone she works for and may not get along with. 

Tenants by the Entirety (“TBE”) 

In addition to the four unities required for JTWROS, tenants by the entirety must also be united by marriage. This form of ownership is reserved for married couples and gives spouses special protection that prevents one of the owners from unilaterally destroying the tenancy. In other words, when title is 

taken as TBE, both spouses, if living, are required to sign a deed if title is conveyed to another person or entity. This protects spouses from unknown conveyances that attempt to oust them from ownership or destroy the tenancy. If the deed is silent and does not specifically state TIC, JTWROS, or TBE, there is a presumption that married couples take title as TBE. That said, it is best practice that the deed recite ownership as TBE or “as husband and wife” so that the marriage does not have to be substantiated if a spouse dies or if the property is sold. In the absence of a legal marriage, title is presumed to be taken as TIC if the deed fails to recite the form of ownership. You should speak with your attorney prior to closing about the different forms of tenancy and which one best suits your needs. Failing to choose the tenancy that’s right for you and your co-owner(s) could have unexpected consequences in the future. 

A Mortgage Consideration 

When multiple people purchase a property and need a Mortgage, the structure of the loan is also very important. All property owners must sign the Mortgage, pledging the property as collateral for the loan; however, only one person needs to sign the Note, guaranteeing repayment of loan. The guarantor will be the bank’s point of contact and will receive communications from the bank regarding the loan. Imagine that Eion and Olivia sign a Mortgage, but only Olivia signs the Note. Should a problem arise with the loan, the bank will not be able to talk to Eion without Olivia’s consent. In other words, if a mortgage payment bounces in this scenario, Eion may not be able to resolve the issue with the bank until Olivia authorizes Eion on the account. This could frustrate Eion’s efforts to bring the loan current. Eion will have no legal obligation to repay the loan, but he could lose his interest in foreclosure if Olivia does not make the payments. If Eion is not living at the property, he may be unaware that Olivia is not making the payments until he is served with a lawsuit. Accordingly, purchasers who are financing the transaction may want to consider the benefits and risks of being in a direct contractual relationship (privity) with the financing bank.