What does ‘tenants-in-common’ mean in real estate?

By | March 5, 2010

In real estate, tenants-in-common signifies multiple ownership of a property. In this form of ownership, each particular owner has complete rights to the
property although many co-own it. These rights include each owner’s ability to
put up his or her part of the entire property for sale.

A co-owner of such property has an individual deed for the portion he or she owns. The owners in a tenants-in-common partnership are also prone to hazards posed to any player in the real estate industry, albeit to a lesser degree. 

Having a stake in this form of joint ownership enables one access to large,
upscale properties one may not be able to acquire otherwise. If a prospective
owner has inadequate finances, he or she may be capable of owning commercial properties with this agreement. If tenants-in-common purchase commercial
property, they gain a larger profit (compared to the single owner of a small
piece of property), and their business is more stable for a longer time. Many
prospective tenants see this type of property as attractive, and the
tenants-in-common arrangement as advantageous.

Another benefit to the tenants-in-common arrangement is better management. Firms with expertise in administration usually handle these large properties for the tenants-in-common. Thus, risk is greatly reduced, and the scale of the assets ensures greater profits. Each person in this type of joint ownership is informed
as to the progress of the property, and collects an amount from the money the
property makes.

In this vein, tenants-in-common can allot less time to supervising their investment and divert their efforts to other possible income streams. Partners in this ownership also benefit from lower tax costs compared to those of a piece of industrial property owned by one person. The tenants-in-common arrangement is beneficial in many ways. It helps one who wishes to earn from the real estate market while reducing the risks and increasing the returns.