Tenancy in common explained: What it is and how it works

Many people dream of owning a second home, but the thought of an extra set of taxes, utility bills and maintenance responsibilities snuffs out any hope of making that dream a reality. But what if you could share the financial load (and workload) of home ownership with someone else? Read on to learn more about what joint tenancy is and how it can protect your rights as a homeowner.  What is joint tenancy?  Joint tenancies involve rights of survivorship. This means the ownership of the property passes straight to the surviving tenants upon the death of a deceased owner without going through the probate or court systems. This is important for co-owners because it ensures the property automatically stays with the remaining owners, providing legal protections and clarity in the transfer of ownership. Joint tenancy falls under the umbrella of joint ownership — when more than one person owns a share in a piece of real estate. In a The three main types of joint ownership are joint tenancy, How does joint tenancy work? Any two people can form a joint tenancy; they don’t need to be married (though this is  common). With joint tenancy, co-tenants have equal interest in property ownership, and each co-tenant has full access to the property. Tenants may occupy the property together or separately.  What are the rights of survivorship?  Rights of survivorship are a key feature of a joint tenancy agreement, ensuring a seamless transfer of ownership when one co-owner passes away. This means that if What are ownership rights?  Property ownership defines what you can legally do with your home, from living in it and making improvements to selling or transferring it. In a joint tenancy, all co-owners share equal rights to use the entire property, as well as equal responsibility for its upkeep and financial obligations. This structure is common among relatives or married couples who want a clear path for transferring ownership to the surviving co-owner. Rules for creating a joint tenancy Creating a joint tenancy requires following specific legal rules to ensure all co-owners have equal rights and that the property passes smoothly to surviving owners. While the rules are generally consistent, some details can vary by state, so be sure to check local laws or work with legal counsel. These rules include:  Following these rules makes co-owning a home smoother and helps prevent disputes while preserving the benefits of joint tenancy with right of survivorship.  Severing a joint tenancy  Sometimes, co-owners may need to sever a joint tenancy arrangement. This can happen if relationships change, one owner wants to sell their share or you’re transitioning from joint tenants to a tenancy in common to allow unequal ownership shares.  Severing the agreement gives each owner more flexibility and control over their portion of the property. Here’s an overview of how to do it:  Understanding tenants in common vs. joint tenants is key when severing a joint tenancy agreement. This flexibility can also help if you’re planning future purchases, such as learning Benefits of joint tenancy Unlike a This includes but is not limited to earned equity in the home, the right to sell (as long as it’s in keeping with the joint tenancy agreement) and free use of the property according to your share.  Affordability The cost of a home doesn’t end with the purchase price. Insurance, taxes, maintenance, utilities and HOA fees stack up, and having one or more joint owners to share costs can significantly lighten your financial load.  Plus, rather than shouldering the full cost of a home, joint tenancy of property lets you cut that cost in half — or even more. This can greatly increase your buying power and help you get more home for less money.  Protection Joint tenancy lets you share the less-than-fun tasks of home ownership and maintenance with Plus, if the property is occupied regularly, it prevents maintenance issues that arise from neglect. Someone is more likely to be around to notice when there’s a leak or a crack, or a fallen branch that needs attention. Easier legal process Surviving co-tenants don’t have to deal with probate, the drawn-out legal procedure the court system utilizes to validate wills due to the right of survivorship. Regardless of whether the decedent made a will, the surviving co-tenant(s) have instant access to their part of the property without having to go through probate.  Convenience Joint tenancy can also offer a consistent vacation experience. Rather than scrambling to find open dates in a rental with good reviews or stuffing yourself and your luggage into a questionable hotel room, joint tenancy in a second home gives you the freedom for last-minute trips and packing light.  Cons of joint tenancy The strict regulations of joint tenancy can protect you if a co-tenant tries to profit from your investment, but those same conditions may make it difficult for you as well. Co-tenant relationship challenges Difficulties may develop if the relationship between co-tenants alters. Co-tenants must agree on decisions regarding the property, and this can be increasingly difficult if disputes arise. Without the expressed consent of all co-tenants, nobody can sell their portion or the entirety of the property. For example, if a married couple shares joint tenancy of a property and decides to divorce, they will still be held accountable for paying all debt until the person who receives the full stake of the property refinances.  Increased responsibility  If a co-tenant falls under financial hardship or loses employment, the other tenants must agree to continue keeping up with mortgage payments to avoid the property going into default.  Joint tenancy vs. tenancy in common Joint tenancy and tenancy in common both involve property ownership and provide similar The most significant difference between joint tenancy and tenancy in common is that joint tenancy provides equal shares for all parties, whereas tenancy in common has unequal shares and various interests. Is joint tenancy right for you? Whether joint tenancy is right for you depends on your goals, relationships with co-owners and how you plan to use the home. For second homes or vacation properties, it’s important to weigh both the benefits and potential limitations before committing.  Understanding your options can help you make the most of your purchase, whether you’re looking to A better alternative to joint tenancy While joint tenancy can offer simplicity and automatic transfer of ownership, it comes with limitations that can complicate changes in co-ownership. For second home buyers, especially those looking to co-own a vacation property with friends or family, a more flexible approach can make ownership easier and more enjoyable. Pacaso provides a flexible alternative through LLC co-ownership that allows for unequal shares, easier transfers and simpler management so you can enjoy your second home on your terms.  Interested in a more hassle-free way of owning a second home? View Pacaso

Owning a second home doesn’t have to mean taking on the full cost, responsibility, or time commitment alone. Understanding how co-ownership works can help you decide whether it’s the right path for your lifestyle and financial goals. How does co-ownership of a home work? Choosing co-ownership means entering into a shared legal and financial arrangement where each party has In a typical co-ownership agreement, each person purchases a percentage of the home, often ranging from one-eighth to one-half. Ownership shares not only determine your equity in the property but also your access to the home. Scheduling is agreed upon in advance to ensure fair use among all co-owners. Some co-owners manage the property themselves, while others rely on professional services. Regardless of the approach, all shared costs—mortgage, taxes, insurance, and maintenance—are divided proportionally according to each owner’s share. Clear agreements are essential to outline responsibilities, decision-making processes, and procedures for selling ownership stakes. What are different types of co-ownership? There are several ways to structure shared ownership: Each structure has its nuances, but all types of co-ownership share the common goal of making luxury homeownership more accessible and manageable Why is co-ownership growing in popularity? The concept of co-owning a home has become increasingly popular as buyers seek more affordable ways to access luxury real estate. By sharing expenses, you can enjoy Professional management companies or fully managed models like Pacaso, also make the process easier by handling maintenance, scheduling, and day-to-day operations, allowing owners to focus on making memories rather than managing logistics What are the pros and cons of co-ownership? Co-owning a home offers several benefits: However, co-ownership can also present challenges, especially in DIY arrangements: Clear agreements, defined processes, and strong communication are essential to minimizing these challenges and ensuring a successful co-ownership experience. What’s needed to start a co-ownership agreement? To start a co-ownership agreement, it’s essential to establish: Having these elements in place from the beginning helps prevent conflicts and ensures a smoother experience for all parties involved. Who should I co-own a home with? Co-ownership works best with people you trust and have compatible schedules and financial goals. Family members, close friends, or even professional co-ownership programs like Pacaso can be ideal partners. The key is choosing co-owners who value transparency, communication, and shared responsibility. How does a co-ownership mortgage work? Co-ownership  mortgage arrangements vary depending on the lender and the co-ownership structure. Some buyers share a single loan, while others may finance their portion individually. Mortgage payments, property taxes, and insurance are divided according to ownership shares, ensuring that each owner contributes fairly. Having a clear understanding of financing options and responsibilities upfront is essential to successfully co-own a home. How do you sell a co-owned property? Selling a co-owned property depends on the agreement in place. Often, an owner can sell their share individually, with existing co-owners given the first opportunity to buy it. Fully managed models like Pacaso can facilitate the How to co-own a home successfully What are tips for co-buying a house? Successful co-ownership starts with choosing the right partners and establishing clear agreements. Other helpful tips include: How do I get started with co-buying a house? How does Pacaso co-ownership work? With Pacaso, co-ownership means less time managing your home and more time making memories with those you cherish most.

The way you structure property ownership shapes everything from estate planning to what happens if a co-owner runs into debt. There are nine types of ownership in real estate, each with different rules around liability, control and transfer. Choosing the right one matters whether you’re buying a primary residence, buying alone or exploring second home Every situation is different, and the right ownership structure depends on your goals, your state and who you’re buying with. If you’re unsure which property type will work best, explore your options with a real estate attorney. 1. Sole ownership Sole ownership means one person holds the title to a property outright. That owner has full authority to sell, lease or transfer the property at any time, with no other parties involved in the decision. Property owned by a sole owner is sent into probate when the owner dies until the will is validated. 2. Joint tenancy with rights of survivorship (JTWROS) One of the most common property ownership types is 3. Tenants by the entirety (TBE) Married couples may instead opt to own property as tenants by the entirety, which is the same as JTWROS, except an owner can do nothing with their ownership portion without consent from their spouse, since the couple is legally considered one entity. If the marriage ends in divorce, the ownership structure automatically converts to tenancy in common. 4. Community property Nine states are community property states, with Alaska allowing residents to opt in. This real estate ownership type classifies any property obtained by a spouse during marriage as “community property” — that is, owned by both spouses, even if the property is only listed in the name of one spouse. This includes all real estate purchases made during the marriage.  The states that recognize community property include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. In Alaska, residents can opt into a community property agreement. The same community property laws apply to registered domestic partnerships in California, Nevada and Washington. 5. Owning trust In an owning trust, a trustee holds and manages a property on behalf of someone else,  typically a minor child or an adult with special needs. A living trust is created during the original owner’s lifetime. The owner, also referred to as the trustor or grantor, designates a beneficiary to receive the property while continuing to serve as trustee until their death. At that point, a successor trustee steps in to manage the property and ensure it passes to the beneficiary without going through probate. 6. Tenancy in common (TIC) With Unlike joint tenancy, TIC carries no survivorship rights. Each owner is free to sell, will or transfer their share to whomever they choose without input from the other owners. When an owner dies, their share moves through probate before passing to any named heirs. 7. Owning a partnership/LLC or co-ownership A property can be placed under a Owners can create the LLC by doing it themselves or use a third-party company like 8. Condominium ownership Condominium ownership means holding an individual deed to a unit within a multi-unit building, while sharing ownership of common areas with other residents. Those shared spaces are managed through a homeowners' association (HOA), which handles maintenance and upkeep.  Before purchasing, buyers should review the HOA’s financials, rules and fee structure, as these vary significantly from building to building. 9. Cooperative (co-op) ownership In a co-op, buyers purchase shares in a corporation that owns the building rather than receiving a deed to a specific unit. Those shares entitle them to a proprietary lease for their unit. This makes co-op ownership fundamentally different from condo ownership. Rather than holding an individual title, buyers own shares in the corporation that holds the deed.  Co-ops are also most common in New York City but exist in other metro areas. Purchasing one typically involves a board approval process, which can be lengthy and restrictive. Subletting is often limited or prohibited, and financing can be harder to secure since fewer lenders offer co-op loans. What type of ownership is right for you? When comparing the types of real estate ownership, a good starting point is to narrow down by who you’re buying with. From there, a few other factors are worth weighing: A real estate attorney can help you determine which structure fits your situation and state. Own a luxury second home with Pacaso Pacaso offers professionally managed LLC co-ownership of luxury second homes in Up to eight owners share one home, with scheduling handled through  Plus, Pacaso takes care of all of the management and maintenance, so owners show up to a home that’s ready.

Whether you’re buying a primary residence, an investment property or a vacation home, it can be advantageous to share the financial burden with a family member. Purchasing a home with a relative can make home ownership more affordable, giving owners someone to share the cost and effort of maintenance and upkeep with. It can also help buyers with less-than-perfect credit scores to get access to better interest rates and loan terms.  Buying with a relative is especially common with second homes, where each party may not want to shoulder the entire cost of a second monthly mortgage payment on a place where they won’t live in full time.  While buying a house with a family member can often make smart financial sense, there are quite a few things to consider before signing on the dotted line.  What to look for in a house with multiple owners  Anytime you’re shopping for a home, it’s important to make a list of your needs and wants — and be sure to differentiate the two. For example, a need for a family with mobility challenges might be a one-story home  while a want might be a home with a swimming pool.  When you’re buying with a family member, you have more needs and wants to consider, which can make it take longer to find a house that fits the group’s criteria. Start by defining key must-haves for location, property size and amenities. In the case of a second home, decide if you need enough space for everyone to use the property at the same time, or if you’ll be trading off visits.  Pros and cons of owning a property with family members The biggest upsides to owning a home with relatives are mostly financial. With a co-owner, you’ll split big-ticket expenses like the down payment, monthly mortgage payment, property taxes and insurance. Down the road when the inevitable home repairs pop up, you won’t have to foot the entire bill yourself. It’s also worth noting that a 50-50 ownership split isn’t required. It’s up to the co-owners to decide what’s fair in their unique situation.  Another benefit of having a co-owner is having a stronger financial position with your lender. You may qualify for a better interest rate and loan terms based on having a higher combined monthly income and strong credit scores.  However, there are a few drawbacks to owning a home with a family member that you should keep in mind before moving forward. A home is one of the biggest purchases you make in a lifetime, and with a co-owner, you are counting on the other person’s dedication and ability to keep up with payments. If you and your co-owner are listed as co-borrowers on a mortgage and they either can’t or don’t keep up with payments, your credit score will be affected and your home could go through foreclosure if you aren’t able to pay the full amount every month.  Another downside is that it can be difficult to ensure that you and your co-owner will be on the same page in terms of how to care for the home during ownership. When does an issue require a repair? When is the right time to upgrade appliances? If something needs to be replaced, is it a DIY project or do you hire a professional?  To navigate these challenges, savvy co-owners can put a property ownership agreement into place from the date of purchase. This legally binding document can outline how financial responsibility is split, the approach to repairs. and what happens if one owner wants to sell and the other doesn’t. A real estate attorney can help you draft this type of agreement.  Types of ownership structures  When you buy a home with a family member, you can choose from a few different types of legal ownership structures.  Tenancy in common Joint tenancy Another option for co-ownership While it’s common for people to purchase primary residences with co-owners, it’s especially popular when buying a vacation home. After all, it gives you the opportunity to make family memories in your favorite destination without the big price tag.  Spending less is a key benefit to splitting a vacation property with a relative, but the effort to make it a reality can still be quite large. You’ll have to find a home that everybody agrees on, take the time to set up the required legal protections, and come up with an equitable way to split time.  Consider this alternative. Pacaso puts second home ownership within reach by bringing owners together to buy a home, offering ⅛ shares of luxury properties in top vacation destinations But Take a look at Pacaso homes currently available. From

Navigating the responsibilities and complexities of second home ownership can feel overwhelming. That’s where equity sharing comes in.  Equity sharing lets you purchase a portion of a second home with other like-minded owners, giving you access to a property you love without bearing the full burden alone. With this approach, you own a share of the home and contribute to expenses in proportion to your share. Rather than taking on the full responsibility of a second home, you may use it only part of the year, offering a more balanced way to enjoy elevated living.  Here's everything you need to know about What is equity sharing? Home equity sharing is a real estate model where multiple parties share the costs and value of a property. Instead of one owner taking on the full financial responsibility, ownership is divided among multiple owners.  This allows each owner to benefit from the home's appreciation over time while sharing in its use and upkeep. It’s a more flexible path to What are the different types of home equity sharing agreements? A home equity sharing agreement can take different forms. In some cases, it’s a financial arrangement tied to a primary home. In others, it underpins co-ownership, where you hold a deeded share of a property with others.  Common types of home equity sharing include:  How equity sharing works At a high level, equity sharing can take several forms, but the core idea is the same: you partner with another party to share the costs of a home in exchange for a portion of its future value. In some cases, that partner is an investor. In others, it’s a group of co-owners sharing a second home. Here’s how the process typically works, using vacation home co-ownership as a real-world example: For a real-life example, imagine a couple considering a modest cabin on their own. Instead, they choose an equity-sharing agreement and buy a ⅛ share in a luxury mountain home, giving them access to a higher-end property for a similar overall outlay. They enjoy the home during the weeks they actually use it, while their equity grows over time. Equity sharing gives them a more intentional way to match what they own with how they want to live and travel. How Pacaso reinvents equity sharing  So, At the center of this model is a property-specific LLC. Each Pacaso home is owned by its own LLC, and when you purchase a share, such as ⅛, you’re buying a stake in that entity. This gives you real property rights and a secure path to building equity in a high-end home. Just as importantly, this is not a Pacaso also removes the friction that typically comes with shared ownership. As a professional, neutral manager, we handle everything from 5 benefits of equity sharing with Pacaso  Now that you understand what a home equity investment is, here’s how Pacaso’s approach to equity sharing translates into advantages for second-home buyers. 1. Increased purchasing power  Increased purchasing power means access to a higher-end home than you’d buy on your own. Instead of owning 100% of a $1M property, you could own ⅛ of an $8M home. This way, you can enjoy better locations and amenities while aligning your spending with how often you use it.  2. Reduced carrying costs  With equity sharing, you only pay for your portion of the home’s expenses. Costs like maintenance, property taxes and utilities are split based on your ownership share. For example, if you own 1/8 of the home, you pay for 1/8 of the ongoing costs.  3. Professional management  Pacaso handles the day-to-day details, so you don’t have to. There’s no coordinating with contractors or scheduling cleaners — everything from maintenance to upkeep is  4. Resale liquidity Should you decide to sell, Pacaso offers a more streamlined path than traditional private arrangements. With an active marketplace and built-in demand, it’s easier to list and  5. Right-sized ownership Right-sized ownership means purchasing a share that aligns with how often you actually plan to visit — so you’re not overpaying for unused time.   Equity sharing vs. tenancy in common While both models involve shared or Pacaso’s model is more streamlined than a traditional With Pacaso, ownership is held through a property-specific LLC for a more efficient and secure experience. This provides an added layer of liability protection for owners and smoother day-to-day management, so routine decisions don’t require constant coordination or individual approvals.  Equity sharing considerations  Equity sharing offers many clear advantages, whether you hope to Is equity sharing right for you? Equity sharing is ideal if you want to own a luxury vacation home without taking on the full responsibility of doing it alone. If you value access to high-end properties in desirable destinations, but don’t plan to use a home year-round, this approach lets you match ownership to how you actually use the home while still building long-term value. It’s especially appealing if you want a more streamlined experience. If you’d rather spend your time enjoying the home instead of coordinating maintenance and managing logistics, equity sharing makes it possible. The Pacaso way to real estate equity  Pacaso brings a modern, thoughtful approach to shared ownership — combining the benefits of equity sharing with a seamless, professionally managed experience. If you’re ready to explore a smarter path to vacation home ownership,

If you invest in a fractional ownership of a holiday home, you'd have the right to use that property for a predetermined number of days or weeks annually. This approach allows individuals to enjoy the benefits of owning premium assets without bearing the full financial burden alone. In this post, you’ll learn what fractional ownership is, explore its pros and cons and get answers to some frequently asked questions. Understanding fractional ownership You’ll typically find fractional ownership for real estate like vacation homes. However, fractional ownership can also come into play for art, stocks and fashion. When owners purchase real estate assets with fractional ownership, they’re issued deeds representing their fraction of the property.  How fractional ownership works It may sound complicated, but fractional property ownership is pretty cut and dry. Here’s how it works: Types of fractional ownership There are two main types of fractional property ownership structures: an entity, like an LLC, and tenancy in common. Fractional ownership through an entity Some properties split ownership by using a structural entity like an Tenancy in common Tenancy in common (TIC) means each tenant holds an individual deed for a fraction or percentage of a commercial or residential property. However, no one person or company is in charge. With a TIC, individuals can own different percentages of the property but share it equally. Some TIC agreements are self-managed. Fractional ownership vs. timeshares Timeshares may be shared by as many as 52 owners (one person or group for every week of the year) while fractionally owned properties can have as few as two owners.  Benefits of fractional ownership Fractional ownership has many benefits, including shared maintenance costs and upkeep, among others. Here are some of those benefits: Expanded opportunity to own Fractional real estate investments allow you to own a portion of Deeded ownership Unlike a timeshare, fractional home ownership gives you a deed to a fraction of the property itself (sometimes called a Usage rights Unlike short-term Shared upkeep and maintenance costs Using the fractional ownership model, you're also responsible for only a fraction of the property's upkeep and maintenance. This includes taxes, HOA fees, repair bills, landscaping, utilities, Lower upkeep and maintenance burden Most fractional When you have fractional vacation home ownership through an entity, it will include preventative and Cons of fractional ownership Though fractional ownership has advantages, there are a few drawbacks to consider.  Fewer financing options Fewer banks provide mortgages for those looking to buy properties fractionally. You may need to shop around or consider other ways to Less flexibility and freedom All decisions about maintenance, repairs and decor must go through all ownership partners, which can be a hassle. If you want to sell a fractional property, the other fractional owners must approve the sale, depending on your agreement.  Some fractional property ownership clubs also require you to maintain an agreement with the club or property management company associated with the home, with no option for self-management or management outside the company. Limited travel opportunities While it's not unheard of to own shares in multiple fractional ownership properties in different locations, investing in fractional ownership also means investing in the location you’re going to revisit. Of course, you can still vacation elsewhere, but it's something to factor into your travel plans and budget.  Similar alternatives to fractional ownership Where fractional ownership falls short, Pacaso steps up. Pacaso's professionally managed LLC co-ownership model gives you all the perks and lower co-ownership costs with key differences that set it apart from fractional ownership resort clubs. Unlike fractional ownership resorts, Pacaso offers LLC