What is a Tenants in Common Agreement?
In a tenancy in common, all the owners have an equal right to possess the whole of the property; however, that doesn't mean everything is always equal. Perhaps you own 70% of the property while your partner owns 30% - either of you can make use of the entire property, but if you agreed to sell the property, or your portion of it, you would be entitled to the majority of the proceeds. Even if you're not interested in selling the property any time soon it's still important to have your agreement in writing. If there's ever a disagreement between you and your partner you'll want to have everything written down beforehand - not to mention that any real estate transactions have to be in writing to be legally binding. All these details can be important and you can put them in writing with a Tenants in Common Agreement.
When to use a Tenants in Common Agreement:
- You purchased property with other people.
- You and others inherited or were gifted property.
Tenants in Common Agreement
THIS AGREEMENT, made on this , by and among
of , ,
hereinafter referred to singularly as Tenant and collectively referred to as the "Tenants in Common."
The Tenants in Common have jointly acquired the fee title to the property described below
The Property is legally described as follows:
Each of the Tenants in Common has an equal and undivided interest in the Property as follows:
The parties have agreed to limitations on the right and power to transfer their undivided
Definitions of terms
The following terms shall have the meanings and definitions as set forth below:
(a) "Related individual" or "related individuals" shall mean brothers, sisters, spouses, lineal descendants, spouses of lineal descendants, trustees for the benefit of any such persons, and corporations owned or controlled by any of the foregoing.
(b) "Proportionate share" shall mean that portion of the undivided interest in the Property offered for sale which the undivided interests owned by a Tenant in Common and his "related individuals" bears to all of the undivided interests in the Property, other than that offered for sale.
(c) "Computed value" shall mean the value of the undivided interests in the Property as assessed by a comparative market analysis performed by a licensed realtor selected and agreed to by the Tenants in Common. Such computation shall be binding and conclusive upon the parties. The computation shall be made in accordance with generally accepted practices consistently applied in the area.
Now, therefore, the parties agree as follows:
Each of the Tenants in Common will not dispose, transfer, devise, convey, lease, mortgage, or otherwise encumber his undivided interest in the Property, without the written consent of the other Tenants in Common, whose consent shall not be unreasonably withheld.
(a) Upon the death of a Tenant in Common, his or her undivided interest may be transferred to a "related individual" or to "related individuals" upon such terms as may be agreed upon with the executor or administrator of the deceased Tenant's estate or as may be provided in his will or in a separate agreement duly signed by the Tenant. Notwithstanding any such transfer to a related individual, the transferee shall not have any rights in and to the Property except through the transferor Tenant.
(b) In the event that no transfer is made as provided in subparagraph (a) after the appointment of an executor or administrator of the deceased Tenant's estate, then the executor or administrator shall offer the undivided interest for sale to the other Tenants in Common at the "computed value." Each Tenant in Common shall have the right to purchase a "proportionate share" of the undivided interest. Payment for the undivided interest shall be made within 30 days after the determination of the "computed value" unless arrangements for deferred payment are agreed upon. In the event that the undivided interest of the seller is not purchased by the other Tenants in Common, then the undivided interest shall be free of all restrictions under this agreement.
Transfer to Related Individual
Each of the Tenants in Common shall have the right to transfer to a "related individual" or to "related individuals" a share or all of his/her undivided interest in the Property, in which event the party making the transfer shall deliver to the other parties to this agreement within days of the making of the transfer, a copy of each and every instrument providing for the transfer. In the event of such transfer, the other parties to this agreement need not consult with or seek the approval of the transferee, and in all matters the consent of the transferor Tenant shall be binding and conclusive upon all such transferees.
Each of the Tenants in Common irrevocably waives any and all right that he may have to maintain any action for partition with respect to his undivided interest in the Property or to compel any sale thereof under any applicable laws now existing or subsequently enacted.
Improvement of Property
Any improvement, sale, or mortgaging of the Property may be made only of the entire Property and then only upon the written consent of all Tenants in Common. However, if two (2) of the Tenants in Common vote to improve, sell or mortgage the Property, said two (2) may acquire the interest of the remaining Tenant in Common by paying him the computed value. Each of the Tenants in Common shall from time to time advance or cause to be advanced, on a pro rata basis, moneys to a common fund as such moneys shall from time to time be required to pay for the maintenance and operation of the Property, including interest and principal on mortgage liens, and for the cost of any improvement. Should any Tenant in Common for any reason fail or refuse to advance or cause to be advanced his pro rata share of moneys required, then and in that event, the other Tenants or Tenant in Common, as the case may be, shall have the right to acquire the interest of the delinquent Tenant in Common at "computed value. In the computation for this purpose the value of any real estate and interests in real estate, including mortgages and leasehold improvements, shall be the book value as shown on the regular books of account without any adjustment for any agreed or appraised value.
Profit and loss
The profits and losses from the operation of the Property shall be shared by the Tenants in Common in accordance with their ownership interest.
In all matters coming before the Tenants in Common for a vote, each Tenant in Common shall have a vote that is directly proportionate to his/her right to share in the profits and losses from the operation of the Property. In the event of a transfer of the interest held by a Tenant in Common to related individuals, the transfer shall include voting rights in direct proportion to the interest transferred to each such related individual.
All matters which must be acted upon shall be decided by a simple majority vote, except as otherwise set forth in this agreement.
This Agreement shall terminate on the sale of the Property and the distribution to the Tenants in Common of the net proceeds of the sale, or at such other times as the parties may agree in writing.
Effect on transferee
Whenever any party to this Agreement or any "related individual" or any other person acquires any interest in the Property, the interest acquired shall be subject to all of the terms of this Agreement with the same force and effect as if the party, "related individual," or person had owned the interest at the time of the execution of this Agreement and had in fact signed this Agreement at that time.
This Agreement contains the entire understanding between the parties and may not be changed or modified orally. Except as otherwise provided in this Agreement, this Agreement shall inure to the benefit of and shall be binding upon the heirs, personal representatives, and assigns of the parties.
This Agreement will be governed by the laws of the State of without giving effect to any conflicts of laws provisions.
In the event any one or more of the provisions contained in this Agreement shall for any reason be held invalid, illegal, or unenforceable in any respect, that invalidity, illegality, or unenforceability shall not affect any other provision. This Agreement shall be construed as if the invalid, illegal, or unenforceable provision had never been contained in it.
Prior Agreements Superseded
This Agreement constitutes the sole and only agreement of the parties and supersedes any prior understandings or written or oral agreements between the parties respecting the subject matter of this Agreement.
This Agreement may be amended by the parties only by a written agreement.
If any action at law or in equity is brought to enforce or interpret the provisions of this Agreement, the prevailing party will be entitled to reasonable attorneys' fees in addition to any other relief to which that party may be entitled.
The parties have caused these presents to be duly signed and sealed the day and year first
TENANTS IN COMMON: