Life is full of surprises. The world might seem like your oyster one minute, then, in the next, you might suddenly find yourself in dire need of some cash. When you look at your options, it might occur to you to take out a mortgage against your share of a property you bought with someone else. Your ability to do this without your co-owner's consent depends on how you hold the title.
If you and your co-owner hold title to your property as joint tenants, you each have a right to the enjoyment and use of the whole house. You also have an identical ownership interest in the property. Joint tenancies carry rights of survivorship – if one owner dies, the nature of the deed transfers his interest automatically to the survivor. Wills or other estate planning measures can't override this. You don't need your co-owner's consent to sell your interest, but you have no control over his interest. This means you can't sell or take a mortgage against the entire property without his consent. You may be able to mortgage your own share, but you may need his consent, and this depends on your state's particular laws (they can vary by jurisdiction, so explore your rights with a local lawyer).
Tenants in Common
Holding title as tenants in common is the most flexible means of property ownership. If your deed says that you and your co-owner are tenants in common, it means you have a physical undivided interest in the home – you both have equal use of it, just as you would with a joint tenancy. However, your ownership interest is clearly demarcated. You might own the property 50-50, 60-40, or by some other percentage. Tenants in common don't have rights of survivorship, and you're typically free to sell your interest to someone else or to take out a mortgage against your share without the consent of your co-owner. As with a joint tenancy, you have no right to do anything with your co-owner's interest in the property, however. You can't take out a mortgage against the whole premises. If you default on your loan, the lender can go to court and ask for an order to sell the entire property so it can recoup its money from your share of the proceeds.
Tenants by the Entirety
Tenancies by the entirety are a form of ownership reserved for married couples, and not all states recognize them. If you're single, or if you and your co-owner bought your property together before you got married, you're either tenants in common or joint tenants. You and your spouse both own the entire property, and a mortgage requires both of your signatures and consent.
If you find that your joint tenancy or tenancy in common isn't working for you and you really want to take your money out of the property, you can file a complaint for partition with the court. A judge can order the property's sale and you can take your percentage of the proceeds. You can also usually convert your joint tenancy to a tenancy in common so you have the most flexibility with your share of ownership. The procedure for this can depend on your state's particular laws. For example, in California, you can simply state in writing that you no longer want your arrangement to be a joint tenancy, then file the statement in the county where the joint tenancy deed has been recorded.
- Law Offices of Edward J. Danhires: Forms of Property Ownership in New Jersey
- Realty Times: Can One Co-Owner Mortgage a Property?
- Nolo: Joint Property and Concurrent Ownership
- The Chicago Bar Association: Joint Tenancy
- Law Offices of Steve Samson: Holding Property in Joint Tenancy Creates More Problems Than it Solves
- The Law Offices of Jay Shehadeh: How Does a Lien Affect a Joint Tenancy?
- National Paralegal College: Joint Tenancy
- Law Offices of Shahram Miri: Severance of a Joint Tenancy
- Keith Brofsky/Photodisc/Getty Images