- Can a Co-Owner of Real Property Rent Without the Others Permission?
- Can a Joint Owner Mortgage a Property Without Consent of the Other Owner?
- Type of Property the IRS Considers Residential Rental Property
- What Is Common Law Property?
- Ordinary Income Property Vs. Capital Gain Property
- How to Invest in Student Housing Property
When two or more people hold property jointly on a deed, this type of ownership is known as a concurrent estate. In concurrent estates, one party may be able to rent the property without the other party's knowledge, though all parties will generally have the right to share in the rent paid. However, the parties' rights may depend heavily on circumstance.
Concurrent Estate Ownership
There are three types of concurrent estate: joint tenancy, tenancy by the entirety (which is basically joint tenancy for a married couple), and tenancy in common. In these types of ownership, the owners are known as "tenants." Joint tenancy is a form of joint ownership that doesn't end when one of the tenants dies; the surviving joint tenants retain ownership of all of the property. In tenancy in common, by contrast, the death of a tenant in common will sever, or end, the tenancy, and divide it up into fractions that go to the surviving tenants and the heirs of the deceased.
Possession of Property
The rules of tenant possession are similar for all forms of concurrent estate. No tenant may commit "waste," meaning that no tenant can take an action that damages the value of the property. But each tenant has the right to possess -- make use of -- the entire joint property. Therefore, in theory, one tenant has the right to rent the entire property to a third party. However, no one tenant has a right to encumber another tenant's interest -- for instance, by putting a mortgage on the property -- or to exclude any of the other tenants from possession the property. If another tenant's right to possess the property has been harmed by the decision to rent the property to the third party, the rental becomes a problem.
When one tenant wrongfully excludes another from the property, this is known as "legal ouster." At this point, the excluded tenant begins to accrue the right to the fair rental value of the property for the time he's been kicked out and denied use. In addition, if the rental of the property results in waste -- for instance, property damage -- the tenant who rented out the property may be found liable to his co-tenants for any damage sustained.
Right to Profits
Most jurisdictions hold that a tenant has the right to keep any profit he earns from his lawful use and possession of the property. But these jurisdictions also hold that a co-tenant who's not in possession of the property still has the right to share in any rents from third parties, as well as any profit from activities that reduce the value of the land. So it seems likely that a tenant who rents jointly owned property on his own will still need to share the rent with others.
- Jupiterimages/Creatas/Getty Images