Owning property comes with various rights and responsibilities. This is especially true for co-owners. After a while, all parties ask, “I own 50% of a property what are my rights?” When you possess a 50% stake in real estate, it’s essential to understand your entitlements.
The decisions you can make, the profits you can gain, and the disputes you may face are all shared. This guide will delve into the dynamics of owning 50% of a property, providing a detailed understanding of your rights and the legal implications.
Co-Ownership of Property: The Basics
Co-ownership implies that two or more individuals have legal rights to a property. Each co-owner holds a fraction of the property, which could be equal or unequal. When you own 50% of a property, you effectively hold an equal share with another party.
In the U.S, the law recognizes two primary types of co-ownership: joint tenancy and tenancy in common.
Joint tenancy occurs when two or more individuals own an equal share of a property, with the right of survivorship. If one owner dies, their share automatically transfers to the surviving joint tenant(s). This form of co-ownership is often chosen by married couples, ensuring that if one spouse passes away, the other becomes the sole owner.
On the other hand, tenancy in common allows co-owners to hold unequal shares in the property. Each co-owner has an unrestricted right to transfer their interest in the property. However, unlike joint tenancy, there is no right of survivorship. If a tenant in common dies, their share becomes part of their estate and transfers according to their will, or if they lack a will, according to the state law where the property resides.
Your Rights as a Co-Owner
As a co-owner of a property, you have specific rights concerning the property’s use, decision-making processes, profits, and leases. Here’s a breakdown of these rights:
Right to Use the Property
As a co-owner, you have an unrestricted right to use and occupy the property. You can use the entire property even if you own just a fraction. However, this does not mean you can occupy a specific part of the property to the exclusion of other co-owners.
Right to Participate in Decision-Making
All co-owners must agree before making any modifications or significant decisions regarding the property. This includes renovations, repairs, and other alterations.
Right to Profits
If the property generates any profits, such as rental income, you’re entitled to a portion of these profits proportional to your ownership stake.
Right to Lease the Property
A co-owner can rent out their share of the property, but they must receive approval from the other co-owners. All co-owners must discuss and agree on the tenant, lease terms, and rental fees.
Right to Sell or Transfer
You have the right to sell or transfer your share of the property. However, in the case of joint tenancy, the agreement of all co-owners is needed to sell the entire property.
Responsibilities of a Co-Owner
Alongside rights, co-ownership also comes with responsibilities. These often involve financial obligations such as:
Paying Property Taxes
As a co-owner, you’re responsible for paying your share of any property taxes due. The deed should specify the details for property tax payments. If it doesn’t, all parties should agree on how to divide these taxes.
Maintaining the Property
Co-owners are typically responsible for maintaining the property. This includes covering the costs of any necessary repairs or renovations, usually split according to each owner’s share in the property.
Disputes can arise between co-owners over issues like property decisions, tax payments, or profit division. In such cases, co-owners should work together to find a resolution. If they fail to agree, they may need to seek legal counsel or resort to a partition action.
Navigating Co-Ownership Disputes
Disputes between co-owners can sometimes escalate, making it necessary to take legal action. A common form of legal remedy for such scenarios is a partition action. This is a court proceeding where the property is divided among the owners or sold, and the proceeds are divided.
If a dispute arises and there’s no written agreement, co-owners may agree for one of them to buy out the others or sell the property and divide the proceeds as per the law. If co-owners can’t agree, they may resort to a partition action.
Co-Ownership in Marriage and Domestic Partnerships
Married couples or domestic partners often choose joint tenancy. In some states, a specific form of co-ownership called “tenancy by the entirety” is available only to married couples or domestic partners.
Under tenancy by the entirety, neither spouse can sell or put a lien on their share of the property without the other’s consent. Creditors cannot seize the property of one spouse if there is a debt sue. The surviving partner becomes the sole property owner upon one partner’s death.
Trustee Rights in Property Ownership
In some cases, a property owner may appoint you as a property trustee. This means you’re responsible for managing the property on behalf of the beneficiary. As a trustee, your rights concerning the property are enough to act in the beneficiary’s best interests. These rights will be highlighted in the trust agreement.
Selling a Co-Owned Property
Selling a co-owned property can be a complex process. If both owners agree to sell, the property can be sold as usual, and the profits are divided based on each owner’s share. However, if one owner wants to sell and the other doesn’t, the situation becomes more complicated. The non-selling owner can afford to buy out the other, or they can apply for an order to sell the property.
In some cases, the joint tenancy must be converted to tenants in common before applying for an order for sale. This process is known as ‘severance of joint tenancy.’ Legal advice is strongly recommended before proceeding with the sale.
Renting Out a Co-Owned Property
Renting out a co-owned property can also be complex. A co-owner can rent out their share of the property. Still, the tenant cannot exclusively occupy any specific part of the property. This scenario might be challenging to navigate, so consulting a lawyer and other co-owners before entering a lease agreement is advisable.
Assisting Your Child to Acquire Property
If you want to help your child acquire property without buying it together as co-owners, consider the following options:
- A lump sum gift for the deposit and moving costs.
- A formal loan agreement.
- An offset mortgage.
- Buying the property on their behalf and renting to them.
Resolving Joint Property Ownership Disputes
It’s crucial for people contemplating shared ownership of a property to take into account several elements to avert disagreements. These may include protocols for decision-making, methods for resolving disputes, first refusal rights, and arrangements for managing unpaid costs.
By assessing these elements, they can formulate a legally binding agreement that defines the mutually agreed terms. It’s also advisable to engage the services of a real estate attorney who can flag potential problems and offer practical solutions.
Frequently Asked Questions
How do you split the jointly owned property?
A partition action is a legal procedure for dividing jointly owned property. This is a court proceeding where the property is divided among the owners or sold, and the proceeds are divided.
What happens if one person wants to sell and the other doesn’t?
If one owner wants to sell and the other doesn’t, the situation becomes more complicated. The non-selling owner can afford to buy out the other, or they can apply for an order to sell the property. In some cases, the joint tenancy must be converted to tenants in common before applying for an order for sale.
Can two people own 100% of a property?
Yes, two people can jointly own 100% of a property. This is typically the case in joint tenancy or tenancy by the entirety, where each owner has an equal share in the property. However, each owner’s rights and responsibilities may vary depending on the type of co-ownership agreement.
Understanding your rights and responsibilities as a co-owner of a property is crucial. We hope you have a better understanding of your question: I own 50% of a property, what are my rights? Securing the services of a seasoned real estate attorney can prove to be instrumental when buying a property with a partner.