7 Simple Facts That Make Understanding Joint Tenancy Easier

If you’re confused about what joint tenancy means and how the ambiguous legal instrument affects estate assets during probate, you’re not alone.

In a nutshell, you’d execute this ownership arrangement to control who will take your share of property by default after you pass away.

As a co-owner, you may hold either tenant in common or joint tenant assets. You may also attach your co-ownership title to both real estate and personal property, granted that you satisfy specific state requirements when executing the joint tenant agreement.

Adding a right of survivorship and figuring out how each partner will use and enjoy the co-owned asset complicates matters further.

Read on to learn the pros and cons of joint tenancy, understand how co-ownership works in Iowa, and discover whether this legal instrument is the correct “probate-avoidance” choice for your particular situation.

1. You may co-own both real and personal property.

Real property is land or any unmovable structure—i.e. farmland, a homestead or a condo. Estate assets such as bank accounts, heirlooms, art, and jewelry are personal property.

When you co-own real or personal property with two or more individuals, each tenant will hold legal title and a share of the asset.

2. Title succession depends on the type of co-ownership you carry.

Iowa estate law separates joint ownership into the three ordinary forms:

  • Tenancy in common (TIC) allows you to break up the property’s title into unequal shares, which usually correlates with how much each co-owner paid to acquire the asset. Upon death, the tenant in common’s shares would either enter probate for distribution among his/her heirs or move to intestate succession.
  • Joint tenancy offers you and other co-owners a right to survivorship, meaning if you or another joint tenant passes away, the remaining title would automatically pass on to the surviving co-owner(s)—the natural conveyance of joint tenant shares accordingly allows such assets to bypass probate proceedings and reach the hands of surviving co-owners immediately.
  • Tenancy by the entirety is a legal instrument reserved for married couples only. Similar to joint tenancy, this legal ownership would establish a right of survivorship between yourself and your spouse where if one partner passes away, the surviving spouse would automatically receive the remaining shares.

3. The Iowa courts will enforce your joint tenant title only if it meets certain legal conditions.

You must satisfy statutory requirements when establishing joint tenancy with another individual.

The courts otherwise may move your joint tenant ownership to another form (usually a TIC) if an interested party successfully brings estate dispute litigation and proves your title lacks the requisite elements.

Accordingly, your joint tenancy must incorporate the following to be enforceable:

  • Interest: Each tenant must hold undivided and equal interest in the property.
  • Time: All co-owners must have received their joint title at the same time.
  • Title: The title document for each tenant must be the same.
  • Possession: You and the other co-owners must have exercised an equal right to possession.

Remember that your joint tenancy includes an implied right of survivorship, meaning you’ll successfully evade costly probate proceedings when you hold a valid joint tenant agreement. If however any one of the above elements fails, your co-owned property may fall into the hands of a tenant’s heir after he/she takes good title.

4. Problems usually arise when your joint tenancy converts to a tenancy in common.

A TIC agreement holds no right to survivorship, and as such, whenever one co-owner passes away his/her property share moves to his/her estate where heirs or beneficiaries inherit the asset.

These interested parties not only will own the property, but they’ll also be free to sell the asset. In such a case, you may find yourself sharing property with an undesirable stranger—then again, freedom to sell may be a good thing if you’re hoping to purchase the new owner’s share.

One way you and your tenants in common can work around this issue would be to agree that each co-owner executes a will conveying his/her title share to the surviving partners in case of death.

5. Always claim the right of survivorship in the title.

Some joint tenant agreements do not expressly assert rights of survivorship, which may impede the conveyance of a deceased tenant’s ownership to the surviving tenant(s).

It’s therefore important to always include this entitlement in document’s title heading (i.e. Joint Tenancy with Right of Survivorship) or declare it within the terms of the joint tenant contract.

Know also that any “implied” right of survivorship language found within a joint tenant agreement doesn’t guarantee an automatic property conveyance will take place. Omitting this term therefore opens the asset to contestation by an interested party when a deceased co-owner’s estate enters probate.

6. You or other joint tenants may terminate the right of survivorship.

Right of survivorship is not perpetual. In other words, you or another co-owner may dispose of this property interest and revert the joint tenancy into a tenancy in common by performing one of the following acts:

  • Sue to invalidate or revoke the right of survivorship found in a joint tenant agreement.
  • Add an option provision in the joint tenant contract that allows for a right to survivorship elimination.
  • Sell your property interest to a third-party—forcing the remaining tenants to execute a separate co-ownership agreement with the new owner if they wish to keep the asset in joint tenancy.
  • You must share all asset expenses with the other co-owners.

As a joint tenant, you will be liable to pay your share of mortgage payments, repair bills, taxes, and anything else related to real or personal property ownership. Likewise, if you waste another joint tenant’s future interest in the co-owned asset—i.e. destroy the property, or fail to pay your share of taxes—you’ll have to indemnify the harmed tenant(s) or risk being sued.

You will however not have to pay for any property improvements performed by another owner if you did not previously agree to the upgrade.

7. Your possession and rental rights as a joint owner of real property will be unusual.

You will own the right to possess and use the joint tenant asset as you see fit; but so will the other co-owners. Iowa further does not require joint tenants who solely possess co-owned real property to pay rent to the other partners.

However, if you’re in exclusive possession of co-owned property and you prevent other joint tenants from enjoying or possessing the asset, you may owe them money. The courts would consider this an ouster and would compel you to pay restitution and damages to the harmed co-owners caused by your tortious act.

You or any other joint tenant may likewise rent co-owned real property to third-parties as long as all tenants agree to lease and the lessor shares the rent profits with the other co-owners.

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