If you buy property with a friend, you typically take title as tenants in common. This is a form of ownership well suited to unmarried couples who want to invest in a home together, or small groups of friends who hope to become homeowners in cities with very expensive real estate. Tenancies in common, like any relationship, don't necessarily last forever.
A tenant in common can legally sell his share of the property or even give it away.
Ownership of Property
Tenants in common can own their property in different percentages. For example, if you contribute $200,000 toward the purchase price and your friend contributes $100,000, your interest in the property can be two-thirds.
You can also tilt the ownership percentage based on other issues. If you and your friend both equally contribute to the purchase, you can agree that you own an increased share if you happen to be in the remodeling business and will be heavily involved in renovations. A tenancy in common can compensate you for your work by giving you a larger ownership percentage.
However you decide to divide your ownership interest, it doesn't mean you each only have the right to use a portion of the home. Legally, you both have full access to the entire dwelling – although some friends, especially in expensive places such as the Bay area, buy a property such as a duplex or triplex as tenants in common and agree that each has his own private home.
Selling Your Share
If your relationship with your co-owner goes sour, or if your life changes dramatically and you want to move, you have the right to sell your percentage share of the property. You can even give it away if you like. It's yours, so you can do whatever you want with it. Your co-owner doesn't have to approve the transaction unless you've made a written agreement otherwise or included such terms in your deed.
Effect on the Tenancy
If you sell your interest in the property to someone else, your tenant in common now has a new co-owner. The individual who buys your interest becomes a tenant in common with the person with whom you initially bought the property.
To avoid this scenario, co-owners can insist on a clause that gives them first right of refusal. In other words, if you want to sell your interest, your friend has the option of buying it from you before you sell it to anyone else. You could only sell your interest to a third party if your tenant in common either declines to buy you out or is unable to do so.
Terminating the Agreement
There is one other remedy available to you if you can't find a buyer willing to assume co-ownership with your tenant in common. You can petition the court to "partition" the property. With a home, this usually means the court orders its sale. A buyer would be able to purchase the entire property, not just a tenant in common interest.
When the house sells, you'd receive a percentage of the proceeds equal to your percentage of ownership. If you hold title to vacant land rather than a dwelling, the court probably would not order its sale if it's legally possible to separate the land into two sections; each of you would get title to a portion equal to your ownership interest.