It’s important to understand tenancy and this confuses many people, even real estate agents. The Merriam-Webster definition is : a holding of an estate or a mode of holding an estate. How you choose to take ownership when you purchase a property is important. This will determine what happens to your interest in this property upon sale or death. Here is a short, easy-to-understand description of the three types of tenancy:
Tenants in Common – Two or more people own a property. The equity interest owned does not have to be equal shares. For example, three owners’ equity can be divided into 10%, 20% and 70%. Their share is inheritable upon death.
Joint Tenants – Two or more people own a property. The owners will have equal equity interest in the property. The equity interest does not pass onto their heirs, but instead will pass onto the surviving person(s). If one individual is sued a judgment can be entered against the property.
Tenants by the Entirety – Reserved only for spouses. A married couple can take the title this way. Equity interest will pass onto the surviving spouse upon death. In the event that a creditor is defaulted by one spouse, the creditor can not take action to place a lien against the jointly-owned property.
When you are buying a house with someone else, you will be able to pick which type of tenancy works best for you prior to closing.
Hope that this helps and if you have any questions, I’d love to hear from you.