Tenants in Common: What First-Time Homebuyers Need to Know

By Julie Marion, Founder of The First Time Homebuyer Workshop

The Definition of Tenants in Common?

Tenants in common is a form of ownership where two or more people can own unequal shares of a property and pass their portion to heirs instead of co-owners.

When buying your first home, most people focus on interest rates, down payments and monthly costs.

But one of the most important decisions you'll make isn't about the loan - it's about how you legally own the property.

The way you hold title can impact:

• What happens if a relationship changes

• Who owns what share of the property

• What happens if someone wants out—or passes away

One option that offers flexibility—but comes with trade-offs—is Tenants in Common.

What Is Tenancy in Common?

Let’s dive into the concept of Tenancy in Common and why it might be a game-changer—or a deal-breaker—for your homeownership journey.

This legal structure to hold property allows multiple people to have ownership of a property, each with a defined share, and it determines what happens to that share if one owner passes away or wants out.

It is an option for people to have an interest in property with a lot of flexibility. For example, tenancy in common allows a variety of property ownership weights not available in other ownerships such as Joint Tenants or Tenants in the Entirety.  Tenants in common have features whereby:

• Two or more individuals may hold an undivided interest in the property.
• Ownership shares can be equal or unequal.
• There’s no right of survivorship—meaning, an owner’s share doesn’t automatically transfer to other co-owners upon death. Instead, it passes to their heirs or as directed in their will.

 Who Can Hold Ownership under Tenants in Common?

• Married couples (though it’s uncommon).
• Unrelated individuals or friends pooling resources to buy a home.
• Business partners investing in real estate.
• Siblings or family members buy shared vacation homes. 

True Story: When Property Ownership Gets Sticky

Imagine this: A couple, firmly set on not having kids, decides to buy a home. The wife (although it is unclear if they are technically married under the laws of the state) takes on the mortgage and provides the down payment (or so it seems). The husband is added to the deed as an owner. After closing, it’s revealed that the wife’s father provided the down payment.

Payment obligations: Mortgage payments and property tax obligations are each equally shared between the husband and wife.  

Sticky: The relationship falters. Who truly has a claim to the property? And what if the wife’s family demands the down payment back? What about the contributions of the husband?

This scenario highlights why understanding Tenants in Common matters.

How Ownership Shares Work in Tenants in Common

• Unmarried Couples: Imagine a couple in a state that doesn’t recognize their partnership, or they are truly just two people buying a property with no relationship other than platonic. Tenancy in common ensures each person’s share goes to their designated heirs, not automatically to the surviving partner.

• Second Marriages: A spouse may want their share of the property to go to their children from a prior relationship rather than their current partner.

• Group Purchases: Four friends buy an apartment building, under tenancy in common, each can pass their share to heirs or sell it without impacting others.

Feeling Overwhelmed Trying to Connect All of This? Most first-time homebuyers don’t struggle with effort—they struggle with understanding how everything fits together.

👉Start Here with our free mini-class: Homebuying Chaos Unwrapped

It walks you through:

Who does what in the process

How decisions connect

What to focus on first

In our modern world there are so many options and truly you are the only one who can decide what is best for you.

Pros of Tenancy in Common

• Flexibility: Owners can hold unequal shares (i.e. 70/30 split).
• Transferable Ownership: Each owner can sell or bequeath their share without affecting others.
• Affordability: Allows multiple buyers to pool resources for a property.
• Divided Costs: Co-owners can share mortgage payments, taxes, and maintenance expenses.
• Add New Owners: Additional tenants can be added over time.

Cons of Tenancy in Common

• Financial Disputes: If one owner fails to pay their share of ongoing costs, tensions can rise.
• Conflicting Interests: One owner may want to sell while others do not, forcing negotiations—or even a sale of the entire property.
• Borrowing Challenges: Co-ownership can affect individual borrowing power, as lenders often view the entire loan as your responsibility therefore raising your debt-to-income ratio.
• Creditor Risks: Each co-owner’s debt can lead to liens on the property, affecting all owners.
• Planning for a Smooth Experience

Before committing to tenancy in common, consider these tips:

• Discuss Worst-Case Scenarios: What happens if someone wants out, moves, or passes away?
• Create a Realistic Budget: Include taxes, insurance, potential cost increases and maintenance.
• Understand Your Loan: Check for restrictions like owner-occupancy requirements.
• Know Your Goals: How long do you plan to hold the property? Understand amortization schedules and future life dreams.
• Reality: Realistic expectations are needed when considering this type of ownership.
• Legal and Professional Advice Is Key: While tenancy in common offers flexibility and opportunity, it’s not without complexity. Consult a licensed attorney or real estate professional to ensure your ownership arrangement aligns with your goals and protects your interests.

Start Smart—Before You Buy

Understanding ownership structures like Tenants in Common is just one piece of the puzzle. There are other ownerships such as Joint Tenants and Tenants in the Entirety (which we break down separately).  The challenge for most first-time buyers isn’t finding information—it’s knowing how all the pieces fit together before making a decision.

 👉 If you want a clear, step-by-step breakdown of how to approach buying your first home:

Start with the free mini-class: "Homebuying Chaos Unwrapped!"

You’ll learn: 

How to think about affordability

 How ownership decisions impact your future

 What to expect throughout the process

So you can move forward with clarity—not confusion.

Frequently Asked Questions

What is Tenants in Common?
Tenants in Common is a form of ownership where two or more people can own a property together with equal or unequal shares.

Do Tenants in Common have survivorship rights?
No, ownership does not automatically transfer to other owners when one person dies. Their share passes to heirs or according to a will.

Can a Tenants in Common owner sell their share?
Yes, each owner can sell or transfer their ownership interest independently.

Is Tenants in Common good for unmarried buyers?
Yes, it is commonly used by unmarried buyers because it allows flexible ownership and inheritance options.

How is Tenants in Common different from Joint Tenancy?
Tenants in Common allows unequal ownership and no automatic transfer upon death, while joint tenancy includes equal ownership and survivorship rights.

Disclaimer: This content is intended to educate first time homebuyers and let you know there are options. Discussing the issues with the professionals you hire during your home buying journey is prudent. We are not recommending or advising you on your financial or legal situation

Let’s demolish homebuyer remorse together—one empowered buyer at a time.

 Julie Marion 

Founder of The First Time Homebuyer Workshop, homebuyer educator, Urban Planner, Freddie Mac Credit Counselor, Real Estate Broker, Podcast Host, You Tube Contributor.

www.TheFirstTimeHomebuyerWorkshop.com