A Tenants in Common Agreement: Clarity and Protection for Co-Ownership of Real Property
Co-owning property can be an exciting opportunity, but it also comes with unique rights, responsibilities, and potential risks. Whether you're purchasing property with a friend, family member, or business associate, inheriting property, or already co-own property with others, a Tenants in Common Agreement is a valuable tool for safeguarding your interests and ensuring a smooth co-ownership experience.
What is a Tenants in Common Agreement?
A Tenants in Common Agreement is a formal contract between co-owners of real property that lays out the rights, responsibilities, and obligations of each party. The agreement protects each owner’s share of the property and typically includes:
A description of the property and its location.
Each co-owner’s percentage of ownership.
Details about how decisions are made and disputes resolved.
This agreement provides fairness and flexibility by ensuring all co-owners have access to the property and allowing them to determine whether, and under what circumstances, their interest can be sold, transferred, or gifted. It’s an essential document for maintaining harmony among co-owners and avoiding disputes.
Why is a Tenants in Common Agreement Important?
Without a formal Tenants in Common Agreement, co-owners are vulnerable to disputes. If disagreements arise, the only resolution might be a partition lawsuit, which can lead to expensive, stressful, and time-consuming court proceedings. A well-drafted agreement puts control back into the hands of the co-owners and minimizes the risk of contentious litigation.
A Tenants in Common Agreement can:
Avoid Partition Lawsuits: Provides a roadmap for resolving disputes, eliminating the need for expensive court battles.
Protect Contributions: Records each party’s financial and non-financial contributions to the property.
Facilitate Exit Plans: Establishes clear terms for dissolving co-ownership if relationships change or co-ownership becomes untenable.
Enhance Communication: Encourages open discussions during the drafting process, reducing the likelihood of future conflicts.
The Pitfalls of Partition
A partition is a lawsuit used to divide co-owned property. Without a formal agreement, co-owners may seek a partition lawsuit, leading to court-ordered sales or subdivision of the property:
Partition in Kind: Subdivides the property (common with farmland or undeveloped tracts of land).
Partition by Sale: Sells the property, typically through a sheriff's auction, and divides the proceeds among the owners.
Partitions are expensive, time-intensive, and emotionally taxing. They often result in significant financial loss due to legal fees and below-market sales. Courts have broad discretion in partition cases, and the outcomes frequently leave all parties dissatisfied.
How Can a Tenants in Common Agreement Help?
A Tenants in Common Agreement provides the tools to:
Prevent disputes by clarifying rights and obligations.
Establish fair and efficient procedures for co-ownership, including buyout options or exit plans.
Protect property equity by avoiding forced sales through litigation.
How Can GLO Help?
Whether you are contemplating co-ownership, inheriting property, or navigating an existing co-ownership situation, GLO can assist with:
If you’re entering or navigating co-ownership, GLO can assist by:
Drafting a Tenants in Common Agreement: Whether you are purchasing property, inheriting it, or already co-own property, GLO can help ensure smooth co-ownership with a clear and tailored agreement.
Resolving Disputes: If you are already facing challenges in a co-ownership situation, GLO can strategize with you to find a fair and efficient resolution, helping you avoid the costly and stressful process of a partition lawsuit.
By working with experienced professionals, you can secure your property rights and foster a harmonious co-ownership arrangement.
Protect your interests and avoid unnecessary conflicts. Contact GLO to set up a Tenants in Common Agreement or to strategize solutions for co-ownership challenges.
Take Action Today
Establishing a Tenants in Common Agreement is the most effective way to safeguard your interests and avoid the challenges of co-ownership disputes. Contact GLO to create or update your agreement and ensure a harmonious co-ownership experience. Fill out an Intake Form today to get started!
GLO has prepared this blog to provide general information on legal issues that may be of interest. This blog does not provide legal advice for any specific situation and this does not create an attorney-client relationship between any reader and GLO or its attorneys. GLO engages clients through a specific fee agreement. GLO does not guarantee any results.