What Is Joint Tenancy for Shareholders?

If two or more people own a property jointly, the law refers to this as joint tenancy or concurrent ownership. Several types of concurrent legal ownership of real estate exist in the United States. The form of joint tenancy exercised depends upon the shareholders involved in the transaction. A contract between two independent parties is a simple joint tenancy, while a joint tenancy between married parties is referred to as tenancy by the entirety.

Joint Tenancy

  1. The state of joint tenancy in its purest form refers to the ownership of equal and undivided shares in a property by two or more unrelated people, according to the Internal Revenue Service. The contract is created between all shareholders at the time they take ownership of the property. Each tenant has equal ownership of the property and equal responsibility for the liabilities of the asset. No party has the right to use the property as collateral for a loan or incur any other debt without the agreement and signature of the other shareholders. A shareholder can petition to partition, or break up the tenancy contract.

Tenancy by the Entirety

  1. This form of joint tenancy applies specifically to married couples. It carries the same rights and responsibilities as simple joint tenancy, but the couple is considered a single legal entity. In the event of death, the survivor has the right to automatic title; however, if the marriage dissolves, the agreement converts to a regular joint tenancy. Unlike simple joint tenancy, this type of partnership cannot be partitioned without the consent of both parties.

Right of Survivorship

  1. Under both forms of joint tenancy, each shareholder or tenant has the right to survivorship. This means that when one shareholder passes away, ownership automatically passes to the surviving shareholders. As all shareholders own an equal share, the passing of one increases the size and value of the share belonging to the others. The right of survivorship takes precedence over all other claims on the property, including those of heirs, beneficiaries and creditors. The right continues until only one shareholder remains and the last tenant becomes the sole owner of the property.

Probate Avoidance

  1. The right of survivorship enables shareholders in a joint tenancy arrangement to bypass probate, with its various delays and costs. This is controversial in some circles, and the legal profession considers it a probate avoidance device.


  1. In the case of liens against a property owned under joint tenancy, these may attach only to the interest of the shareholder concerned, not to the entire property. If a creditor sells the property because of the lien, the seller must compensate all non-liable shareholders from the proceeds of the sale. Creditors such as the IRS can sell the liable taxpayer’s share of the property to recoup a debt. In such case, the joint tenancy converts automatically to a tenancy in common, in which unrelated shareholders may legally own unequal shares of the asset.