What Is a Joint Tenant in Bankruptcy?

Joint tenancy may complicate bankruptcy.

Bankruptcy can be a difficult time for anyone, but the challenges may be compounded significantly if you have joint tenancy of a property. Joint tenancy of real estate is common among married couples and business partners.

Definition

A joint tenant is someone who owns an interest in real estate with one or more other people. The characteristics of joint tenancy are that each tenant is listed on the property's title. Because of this shared ownership, each party has equal rights to enjoy and manage the property.

Significant Benefit

One of the benefits to having joint tenancy occurs upon the death of one of the tenants. At the time of death, the deceased's share is automatically transferred to the surviving tenants without influence of the courts — this is referred to as survivorship rights. The automatic transfer to the surviving tenants reduces legal costs, the time it takes for litigation in probate court, and uncertainty about the future of the property.

Bankruptcy Challenges

In the event one of the joint tenants files for bankruptcy, it may affect the other tenants' interest in the same property. Creditors may seek to secure ownership of the remaining tenant's share of the property. A judge could order the property sold with the nonbankrupt partners being given their share of the proceeds. Also, depending on the state, one tenant may petition the courts to force the sale of the property.

Legal Advice

Because real estate transactions may be complicated, it's advisable to seek professional legal help to determine if joint tenancy is right for you. An attorney can provide you with guidance and explain the nuances of the laws particular to your state.

References

• Goliath: Co-Ownership of Property & Bankruptcy
• The Missouri Bar: What Is Joint Tenancy?
• The Mortgage Professor's Web Site: Holding Title to a Home in Joint Tenancy