Tenants in Common & Foreclosures

Who gets the keys when a property is foreclosed?

Foreclosures are a serious consequence for borrowers and owners who do not adhere to the terms of their mortgage as outlined in the deed. Tenants in common may be threatened with foreclosure even if they are up-to-date with payments.

Types of Ownership

Ownership types come in three flavors: sole, joint and tenants in common. With sole ownership, one party owns a property. In joint ownership, two or more parties have equal rights to a property and are on the same deed. This is common for married couples. With tenants in common, two or more parties own a stake in a property and have individual deeds. This often used for investment property. (Reference 1)

Property Foreclosure

Foreclosure laws, time frames and guidelines vary from one state to another. The laws governing foreclosure of properties under tenants-in-common scenarios will be subject to the language in the deed as well as state law.

Considerations

When one party to a tenant-in-common deed neglects to meet his or her obligations to the mortgage-holder, the other owners have an option to buy out the portion in danger of foreclosure. If they opt not to do so, they could lose their own stakes to a foreclosure.

References

• Loansafe: What does 'tenants-in-common' mean in real estate?
• Avvo: Can a lender foreclose on a tenant in common who is not liable for the note?
• Irvine Housing Blog: Vesting Title