Tenancy in common (or TIC for short) is the first of three ways in which multiple people can take ownership of the same Florida property at the same time.
With tenancy in common, each co-owner owns (on paper) a discrete and separate ownership interest in the property. It doesn’t have to be 50/50. There could be three tenants in common, one of them owning 65%, another 30%, another 5%.
Note that despite differing sizes of ownership interest, every tenant in common is assumed to have equal rights to access and occupy the property, unless established by the tenants in common according to a separate agreement.
This is common for real estate investors, each of whom may be putting different amounts of money or effort into the deal.
Moreover, tenancy in common does not have to be established at acquisition. Someone could own 100% of a property, then sell or transfer a 40% ownership interest, and the original owner and the new co-owner are now 60/40 tenants in common.
Pros of Tenancy in Common
Like sole ownership, TIC is a relatively straightforward form of property ownership, easy to paper up.
Each tenant in common has the right to do with their ownership interest what they choose. A tenant in common could sell or transfer their ownership interest (or part of their ownership interest) to someone else, or bequeath it to someone in a will.
Tenants in common can also use their portional ownership interest as collateral for loans (but not a mortgage loan against the entire property). If one tenant in common gets sued, the plaintiff can only claim the ownership interest of that one tenant in common, not the entire property.
Cons of Tenancy in Common
The most obvious advantage of tenancy in common is also the most obvious disadvantage — one tenant in common can sell or transfer ownership to anyone. This could leave the other tenants in common with a roommate or co-owner they didn’t get the chance to choose or screen.
While tenants in common can sell or will their individual ownership interest as they see fit, to sell or otherwise dispose of the entire property, all tenants in common need to agree to the sale. If one tenant in common refuses, the entire sale could be scuttled.
Each tenant in common must also agree to any loans taken out against the property. If one tenant in common refuses, the loan won’t close because mortgage lenders want the entire property as collateral, not just a portion of it.
Moreover, if the tenants in common do take out a loan against the property — or if a tax lien or mechanic’s lien is placed on the property — each tenant in common is jointly and severally liable for the loan.
What that means is that each tenant in common can be held fully responsible for the entire loan balance and payment, not just a portion of the loan balance or payment proportional to their ownership interest. I.e., if one tenant in common skips on the loan, the other tenant in common is fully liable for the entire loan.
Finally, if one tenant in common passes away or becomes incapacitated, his/her ownership interest goes into probate, just as with sole ownership.