Understanding Co-Tenancy Property Ownership in Iowa: Tenants in Common vs. Joint Tenancy
When two or more residents jointly own the same property, they engage in a legal relationship known as co-tenancy property ownership. Also referred to as vesting, co-tenancy carries with it several options for determining the percentage of a property one of the co-tenants owns, as well as what happens to the property in case one of the co-tenants dies. In the State of Iowa, the two forms of co-tenancy relationships go by the names Tenants in Common and Joint Tenancy with Rights of Survivorship.
Key takeaways
Key points
- When two or more people own property together, the deed decides how they share it.
- Tenants in common can own equal or unequal shares, and each share passes by will or to heirs.
- Joint tenants with right of survivorship hold equally, and the survivor takes the deceased owner's share.
- Survivorship generally controls over a will, so the deed wording matters.
Although the two legal forms of dual tenancy ownership have similar characteristics, there are some important distinctions that determine the percentage of a property owned by each of the residents of the property. In addition, a major difference between a Tenants in Common and Tenants with Rights of Survivorship relationship is how the State of Iowa decides what happens to a property when one of the co-owners passes away.
Tenants In Common
Two or more owners can own equal or unequal shares in a Tenants in Common property ownership arrangement. Whether the shares held are equal or unequal in terms of financial leverage, the total shares must equal 100 percent. Tenants in Common ownership contracts establish that one owner’s shares are distinct from the shares held by a second owner in a property. This means one owner has the legal right to transfer his or her shares to another owner, without having to gain consent from the other owners of the property. If an owner dies, the shares held by the owner transfer to the person stated in his or her will. Otherwise, the surviving heirs receive the property ownership shares. Tenants in common own a percentage of the entire property – this is different from one person owning the north half of the property and the other owning the south half.
Joint Tenancy with Rights of Survivorship
In a Joint Tenancy with Rights of Survivorship property ownership agreement, each party owns an equal share of the property. This is a common property ownership arrangement for married couples. A joint tenant can usually transfer their own share without the other owners' consent, but doing so generally ends survivorship for that share. To sell the whole property, all owners need to sign. Rights of survivorship, on the other hand, operate in such a way that when one of the owners passes away, their share automatically transfers to the surviving owner (joint tenant).
The right of survivorship takes legal precedence over any language written into a will or an inheritance document. You can learn more about what happens if you pass away without a will in Iowa.
The Bottom Line
When the time comes to purchase a property with your spouse, parents, or possibly siblings, you have to decide how you want to title the property. If you opt for Joint Tenancy with Rights of Survivorship vesting, be aware that to sell the whole property in the future, all owners need to sign. The primary benefit of joint tenancy is the automatic transfer of the property to the surviving joint tenants upon the death of another joint tenant (in case of a married couple, the property passes to the wife upon the passing of her husband).
However, if you choose to move forward as Tenants in Common, each separate owner (tenant in common) may sell their “undivided partial interest” as they wish, without the other owner’s consent. It is more common to see this method of ownership used when passing partial interests of property to multiple heirs through probating a will.
There are other methods in which an entity (trust, limited liability company, corporation, etc.) can take title to real estate, and we will save that discussion for a future blog post!
Regardless of your preferred property ownership type, it’s essential to actively engage a licensed Iowa real estate attorney, such as Danilson Law, to stay informed about the latest changes to Iowa real estate laws.
What do co-owners ask about tenancy in common and joint tenancy?
Neither is better for everyone. Joint tenancy with survivorship can let the surviving owner keep the property without it going through the other owner's estate. Tenancy in common lets each owner leave their share to whoever they choose. The right choice depends on your relationship, your plans and your estate goals.
Generally, no. Survivorship rights usually pass your share to the surviving joint tenant, even if your will says something different. That's why the deed and your estate plan need to line up. If they don't, the property may not go where you expect.
For deeds signed on or after January 1, 2015, Iowa presumes a joint tenancy with survivorship when the deed names two people as married to each other, unless the deed says otherwise (Iowa Code 557.15). Unmarried co-owners don't get that presumption. We recommend the deed spell out what you want.
Often, yes, but it usually takes a new deed and the right signatures. Changing how title is held can affect survivorship, taxes and who must sign later. Danilson Law prepares and records deeds in all 99 Iowa counties and can explain what a change would mean for you.
Have questions about your own property? Book a Discovery Call with Danilson Law, see our Iowa deed services, or call 515-512-5500. We work with clients in all 99 Iowa counties.
