Tenancy in Common
Key Takeaway
- Tenancy in Common is a shared ownership structure where co-owners are free to sell or pass on their share to another person without approval from other partners, and upon death, their share is passed on to their beneficiary or heir.
What is Tenancy in Common?
Like Joint Tenancy, Tenancy in Common (TIC) is also a shared ownership structure where two or more people share the ownership of a property or a parcel of land. However, in this structure, it is not necessary for all co-owners to have an equal share.
In this arrangement, an individual is free to sell or pass on their share to another person without the need for approval from their partners. Similarly, one can buy a share in a Tenancy in Common or exchange Tenancy in Common shares (subject to some CRA rules) whenever they want.
In this arrangement, when one of the shareholders dies, their share is passed on to their beneficiary or heir, determined by their will or government rules, and not to the other partners. The number of tenants in a Tenancy in Common can change over time.
For example, a property is co-owned by two people - Karen has 60% ownership of the property and John has the rest of 40%. In her will, Karen decides to pass on equal parts of her share to her children Eva and Tom upon her death.
In such a case, when Karen dies, Eva and Tom would both receive 30% of the share in the property. The property would then have 3 co-owners - John, Eva and Tom.