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What is tenancy in common?
Tenancy in common refers to a form of fractional ownership in which multiple individuals share a property title. The number of owners can range from as few as two to as many as desired, without any set limit on the total number of individuals holding the title
Understanding tenancy in common
Tenancy in common (TIC) is a form of property ownership that goes beyond the traditional concept of tenants and landlords. It allows multiple individuals, whether related or unrelated, to share ownership of a commercial or residential property. With TIC, co-owners can combine their resources to invest in larger properties
In a tenancy in common arrangement, each owner holds an equal or unequal percentage of the property. While ownership shares may differ, all owners have equal usage rights and responsibilities. This means that someone with a 50% ownership share has the same rights as a tenant with a 10% ownership share. The property is collectively managed, and decisions are made by the group of owners. Ownership percentages are reflected in the deeds of the property
When it comes to selling and inheritance, tenancy in common has unique considerations. Unlike some other forms of joint ownership, tenants in common do not have survivorship rights. In the event of a tenant's death, their share of the property passes to their heirs rather than the remaining co-owners
For example, let's consider the Davis, Wilson, and Harris families who co-own a mountain cabin. The Davis family owns half of the property, while the Wilson and Harris families each own a quarter. They all enjoy equal usage rights and plan to pass down their ownership shares to their children. The heirs can then decide whether to sell the property and distribute the proceeds based on ownership interests or keep their shares
To summarize, tenancy in common:
Involves fractional ownership where multiple individuals hold a property title.
Allows for different ownership interests, with shares being equal or unequal percentages.
Passes ownership to an heir upon the death of a tenant.
Involves undivided ownership and is self-managed by the group of owners.
What is the process of establishing a tenancy in common?
In essence, the formation of a tenancy in common involves a single owner transferring a deed to a collective group of co-owners. Additionally, a "tenancy in common agreement" is drafted to specify the ownership percentage allocated to each tenant.
Is it possible to secure financing for a tenancy in common?
Certainly! Financing a tenancy in common is indeed possible, and there are two options available. First, you can choose to obtain a joint loan where all the co-owners collectively apply for the mortgage. Alternatively, each owner can pursue an individual loan based on their respective ownership share. When financing as a group, each co-owner will be required to sign the mortgage agreement. It's important to note that in the case of a default by one owner, the remaining co-owners will be jointly responsible for making the payments.
How can you transfer your shares in a tenancy in common?
There are multiple ways to transfer shares in a tenancy in common. You can choose to sell your shares to a new owner, buy out fellow tenants, or pass them on to an heir through a will
How does selling work if a tenant wants to sell their share?
If an owner wants to sell their share in a tenancy in common, they can do so independently. However, if other owners are not interested in selling, it can lead to complications. If the property cannot be divided equally, a partition action may be initiated through a court order to force a sale. Alternatively, co-tenants can choose to buy out the owner who wishes to sell. If the share is being sold to a new buyer who is not already a tenant, their identity must be disclosed, which may raise privacy concerns.
How do you terminate a tenancy in common?
To dissolve a tenancy in common, the property can be sold which results in the termination of the ownership. This occurs when all owners agree to sell the property and divide the proceeds based on their ownership percentages. However, if there is a disagreement among owners regarding the sale, one owner can initiate a partition action to liquidate the investment to the tenants
How is ownership structured in HOTELA?
HOTELA operates an modern ownership model, where you can own HOTELA Ownership Shares ranging from one or more shares per residence. Each share is equal to one stay per share. There is a maximum of 320 days sold for each residences. HOTELA provides a fully managed ownership structure, simplifying the process of owning a second home. HOTELA establishes an LLC or Special Purpose Corporation, taking care of all maintenance, management, and day-to-day operations, staffing and updates required for your second home and amenities.
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