Joint ownership is a condition in which multiple parties purchase an asset together, sharing in the responsibilities as well as the benefits associated with that shared ownership. This type of arrangement can take on a number of forms, especially when the asset in question is a parcel of real estate. With most types of joint ownership, local laws and regulations will govern how rights to the property are established, the distribution of benefits to each joint owner, and even what happens with the property in the event one of the owners should die.
One of the more common examples of joint ownership is known as joint tenancy. With this arrangement, the joint tenants have the benefit of being able to share in the rights and responsibilities related to the property, usually in proportion to the amount of interest each has in the real estate. A major advantage to this form of joint ownership is that should one of the owners pass away, his or her interest will automatically transfer to the surviving owner or owners, without the need to go through a lengthy probate process in order to assign that interest in the property. Even if a last will and testament has not been prepared leaving the property to the remaining owners, the laws of joint tenancy in many nations still allow for this automatic transfer of ownership. From this perspective, joint tenancy can go a long way toward simplifying the process of settling an estate.
Another example of joint ownership is known as tenancy in common. This arrangement allows two or more parties to hold partial ownership in the property, with each also being responsible for upkeep on the real estate involved as well as making sure taxes are settled in a timely manner. With this arrangement, there is no automatic transfer of ownership to a surviving owner in the event of death. Instead, the deceased owner’s interest in the property will be transferred to a beneficiary designated in a will. That beneficiary can then choose to participate in the tenancy in common arrangement, or sell his or her interest to one of the other owners with relative ease.
Joint ownership is also sometimes in the form of what is known as community property. While a joint tenancy or tenancy in common may involve married couples, other relatives, friends, or even business partners, this particular type of arrangement usually involves two owners who are legally married or are recognized by the local government as being in some other type of legally recognized relationship, such as a civil union. With community property, the real estate jointly owned by the couple automatically transfers to the surviving spouse or partner in the event of the death of the other party. In this manner, the arrangement is similar to that of a joint tenancy, since there is no need to wait for a will to be probated in order to determine who owns the real estate. It is not uncommon for legally recognized couples to also create last wills and testaments that designate each other as their beneficiaries, with stipulations that in the event both parties should die, their community property will be distributed to their children or other designated heirs according to the instructions found in the will itself.