Definition

• Tenancy in common is a type of simultaneous ownership of property. All tenants in common have an individual ownership share of the property. This means that any owner can sell or give away her share of the property without the consent of the other owners. Tenants in common have no right of survivorship. When one tenant in common dies, his share in the property does not automatically pass to the other owners. Tenants in common may also hold unequal interests in the property. In other words, one tenant in common may own 90 percent of the property, while another owns 10 percent.
  
  

Purpose

• The main purpose of owning property as a tenant in common is to allow a group of people to own investment property or income-generating property. Tenancy in common makes it possible for a group of investors to club together to purchase a piece of property that they could not afford individually. Each investor can then sell her share as she wishes, without forcing the other investors to sell. In a tenancy in common, owners do not share each other's liabilities. For example, if one of the tenants in common declares bankruptcy, only his share could be sold to pay off creditors; the other owners would not have to sell their shares of the property.
  
  

Types

• There are several sub-categories of tenancy in common. One common category is a tenancy in common that assigns each co-owner rights to use the co-owned property. In an assigned space co-ownership (SACO), each co-owner is assigned a particular part of the property. SACOs are often used for office buildings or other commercial property. In a SACO, the tenants in common own the entire property together and divide the use of the property by contract.
  
  In a time assigned co-ownership (TACO), owners share the ownership of the entire property and divide its use by time, again using contracts. This is popular with resort or vacation property. In a condominium, each tenant in common owns only a part of the property for their exclusive use, and has a contractual right to use certain common areas, such as the lobby.
  
  

Significance

• In areas where property prices are high or property is in short supply, a tenancy in common allows people to pool their resources and share a piece of property. Tenancy in common also provides greater options for sellers as it allows them to break up large properties and sell parts of the property to different buyers. In this way, they may earn more from the sale than they would get from selling the property as a whole. Many banks now offer a product called fractional loans, in which each co-owner has a separate mortgage. This decreases risk of ownership, as one owner can default on his mortgage without it affecting the other owners financially.