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A tenants in common (TIC) agreement is a contract where two or more people set out their legal ownership rights, obligations, and terms of property management. This agreement can outline what percentage of legal partition each tenant owns or who will inherit the tenant’s shares upon his or her death. Download this printable TIC sample from Lawrina and edit the form to your desired terms.
Create & DownloadInstead of a singlehanded property purchase, people sometimes prefer options that allow them to share property costs and responsibilities. While some may do this for financial reasons, others may use this method as an investment vehicle. Either way, prospective co-owners may enter a tenants in common agreement with other interested purchasers to get the best value for money.
Anyone considering tenancy in common requires a legal agreement to protect the rights and interests of all involved parties. Whether the other party is a friend, family member, or spouse, prospective tenants in common should enter an agreement that specifies the tenancy relationship and defines each person’s rights, responsibilities, and obligations.
A tenants in common agreement (TIC agreement) is a legal contract involving at least two people who decide to share ownership rights to real estate property or land. The tenants in common agreement describes their tenancy relationship, establishing each person’s general rights and individual responsibilities. Specifics include each party’s percentage of ownership, tax responsibilities, and management obligations.
With co-tenancy agreements, partnerships between prospective tenants are accessible regardless of prior relationship. This type of agreement also ensures that the likelihood of a dispute is reduced while the contract is active.
Tenancy-in-common requires a written contract agreed to by all owners. Any interested parties can enter a tenants in common agreement. Since the contract contains specific details of the tenancy and each party’s obligations, no prior relationship is required between co-tenants. Interested parties must only agree to be co-tenants and purchase the property together. The following parties can use a simple tenants in common agreement template to share rights and responsibilities in real estate property or land:
The term “conveyance” refers to transferring property from one party to another. The term is commonly used in transactions with real estate, when parties transfer ownership to real property, such as land, building, etc.
There are multiple examples of tenants in common. Any interested parties can create a tenants in common agreement at any time and for any property. Co-tenants can decide to create a template of mutual agreement and then purchase property together or accommodate another tenant. These co-tenants may be unrelated.
Parties to a tenancy in common agreement do not own individual or separate parts of a property. Instead, each person owns rights to the property and is also responsible for their percentage. Before implementing modifications, all co-tenants must agree on any changes, especially structural adjustments.
Tenants in common must abide by the contract whether or not they live on the property. If one tenant dies, the decedent’s interest in the property does not pass to the other co-tenants. Instead, these interests become the responsibility of the decedent’s estate or heir. Regardless of the death, all other co-tenants retain their interests until the tenants in common agreement is terminated.
An equal share of interests and percentages among co-tenants is not necessary. Co-tenants may decide to share their interests equally or have one or more parties control a larger percentage than the other. Each co-tenant’s responsibility typically matches their portion of the property. Also, parties can sell their share anytime without breaking the tenants in common agreement.
When a couple buys a property together, they can sign a TIC agreement, which primarily protects the interests of each owner. It can also be signed by family members or friends. People who wish to define their share of the property and pass it on to their heirs in the event of their death may find the tenants in common agreement beneficial.
There are different types of tenancy in common arrangements allowed by law. Tenants in common may prefer one arrangement over the other if they want survivorship rights or if they would prefer that the contract be terminated where one person wants to sell their share or buy out the other.
Banks have even begun to offer loans for split ownership percentages when purchasing a property. Co-owners can take out individual mortgages on their shares, decreasing the risk for joint buyers and lowering the risk of foreclosure. There are separate rules and requirements for specific types of property, such as a holiday home or investment property compared to a family home.
The law may also restrict the type of arrangement available to prospective co-tenants. For instance, married or common-law spouses may prefer the Tenancy by Entirety arrangement over simple Tenancy in Common to avoid probate proceedings. Intending co-tenants may use this tenants in common agreement template to enter a contract after deciding which of the following agreements is preferred.
Tenancy in common is the most common type of shared tenancy in the real estate market. Two or more tenants agree to share responsibilities and obligations on a property and maintain the specified relationship until the agreement no longer holds. Under this arrangement, the shared rights and responsibilities may not be equal. Tenants in common may split ownership 80–20, 60–40, or as otherwise agreed. Upon one partner’s death, the decedent’s percentage is transferred to their heir or estate, not the other co-tenant. A simple tenants in common agreement template by Lawrina can help get prospective co-tenants started.
In a joint tenancy, you and your spouse or common-law partner own assets as if you were one person. As a result, both of you have equal rights over the asset, as well as equal obligations.
The concept of tenancy by entirety (TBE) refers to married couples holding an equal interest in property and survivorship rights, which means their property is not subject to probate. It is not 50/50 ownership; each spouse owns 100% of the property.
Tenants must be part of all decision-making proceedings from start to finish. Before drafting the memorandum of tenants in common agreement, each party must demonstrate a willingness to enter into a contract and abide by its specifications.
Co-tenants must properly negotiate before signing a tenancy in common contract. After reaching a consensus, the parties must consider all possible events and include guidelines for these scenarios. For instance, each party must understand what happens if one person wants to sell, the rights available to co-tenants, and how to calculate responsibilities if the property appreciates or depreciates. A tenants in common agreement template should include the following provisions:
If you wish to end your fixed-term joint tenancy, you must simply get the approval of your landlord and consent from the other tenants. When you end your tenancy, it ends for everyone, as mentioned in the printable transfer of ownership agreement template . It is necessary to get all tenants' consent to end a joint tenancy with a break clause unless your agreement states otherwise.
Regardless of how you decide to structure your ownership of the property, there will be tax implications. As joint tenants, you are equally liable for the property's taxes.
Almost all jurisdictions require tenants in common to pay their property taxes as tenants in common. In most jurisdictions, each independent owner may be responsible for up to the full assessment amount. The tenants in common will receive a single property tax bill that will have to be sorted between them.
The implication is that co-tenants are jointly liable for the taxes, meaning that they are each liable for the full amount regardless of their ownership percentage. If this is the case, the co-tenant can deduct the amount they contributed. If this is not the position in the relevant tax jurisdiction, then the applicable state laws will apply. The tenants can pay and deduct taxes up to the amount of their percentage of ownership, if they so decide.
TIC agreements outline the rights, obligations, and management terms of property owned by two or more people. A TIC agreement can help individuals purchase property at a lower price since many people choose to share real estate costs. Tenants may choose to make a tenant in common agreement example to specify what their legal ownership percentage each of them will have or who will inherit their share of ownership on their death. This tenancy in common agreement sample by Lawrina is a helpful tool to protect your property entitlements.
Using a joint tenancy agreement is a smarter option when purchasing a home with a spouse or partner. This way, if one of you passes away, the other keeps the property. Other benefits of a joint tenancy include:
Property law can have particular rules about the language required to deal with certain types of homeownership. Below are the state laws across the U.S. regulating tenancy-in-common and joint tenancy relations.
