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What is a Joint Tenancy Agreement?

What is a Joint Tenancy Agreement?

In a joint tenancy agreement, who owns your house? Joint tenancy is a form of property ownership where two or more individuals hold equal shares of a property, such as a house or land.

In joint tenancy, each owner has an undivided interest in the property, meaning they share equal rights to the entire property rather than having specific, separate portions. One key feature of joint tenancy is the right of survivorship, which means that if one co-owner passes away, their share automatically passes to the surviving co-owner(s).

It's a popular choice for spouses, common-law partners, and families due to the right of survivorship and easy transfer of ownership.

Does it affect home insurance?

Joint tenancy itself typically does not directly impact on your home insurance. However, there are some considerations to be aware of:

Home insurance: If you jointly own a property, ensure that your home insurance policy reflects the joint ownership arrangement.


Liability coverage: Confirm that your liability coverage is adequate for all owners (you and your partner), as they could be collectively responsible for any liability claims related to the property.


Personal property insurance: Each owner should maintain their own insurance for personal belongings within the property.

What are the advantages and disadvantages of joint tenancy?

Advantages:

  • Survivorship rights: ownership is automatically transferred to the surviving joint tenants in case of the death of a joint tenant.
  • Probate cost savings: avoid probate through the right of survivorship in case something happens to one tenant.
  • Simplified estate planning: the property does not become part of the deceased’s estate.
  • Equal responsibility: allows for affording a more expensive property and share the costs of maintenance, taxes, and mortgage payments.
  • Larger mortgage: can also help you qualify for a larger mortgage since it will consider all incomes and credit scores.

Disadvantages:

  • Breakdowns in relationship: might require selling the property.
  • Creditors: a creditor can place a lien on your property, making it challenging to sell. (A lien is typically the final step a creditor will take to collect a debt that is unpaid.)
  • Lawsuits: differences in ideas about the property’s use can lead to disputes.
  • Loss of inheritance for other beneficiaries: only joints tenants have rights to the property.
  • Lack of freedom: permission from other tenants is needed for property changes or arrangements.

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