Tenancy in common (TIC) is a legal setup that is sometimes used for property ownership. Multiple people can all own the property together, and they can have different levels of investment. They could split ownership equally, but they’re not required to do so.
For instance, this sometimes happens when adult children inherit their parents’ home or vacation property. All of the children become co-owners. Often, they do split ownership equally. Four siblings may all own 25% of the property, for instance.
Regardless of the specific division, though, what happens when one of the owners passes away? Do the other people absorb that ownership percentage?
There are no rights of survivorship
As a general rule, rights of survivorship will not apply to a TIC situation. The other owners will not inherit the percentage from the person who passed away. Instead, that person‘s own heirs or beneficiaries may inherit it.
To keep using the hypothetical example above, if four adult children all share ownership of a vacation property and one of them passes away, a quarter of that property would pass on to their children – the next generation. It would not go to their siblings who are the other co-owners unless they specifically drafted an estate plan with that intent.
This can make things complicated because it can massively expand property ownership. New owners may have to be consulted when making decisions, and those owners may also take on certain obligations, such as paying for a portion of property taxes or maintenance costs. It’s very important for those in complex real estate situations to understand their legal options, especially when there is a major change.
