How Should Buyers Take Title to Property?
All four versions of the Contract to Buy and Sell Real Estate allow for a choice in the way in which two or more Buyers can take title to the property purchased. The choice is either to take title as tenants in common or in joint tenancy.
Tenancy in Common
Under Colorado laws, unless the deed states otherwise, two or more people will be presumed to hold title as tenants in common with an equal undivided interest in the property. Each co-tenant has a non-exclusive right to possession of the property, bur an exclusive right to sell, mortgage, or otherwise deal with the property, without the consent of the other co-tenants. Co-tenants can hold title in different percentages, by stating this in the deed conveying title to the co-tenants, or in a deed between themselves.
On the death of a co-tenant, the co-tenant's interest passes to the heirs who will hold title in common with the other co-tenants. Probate must be opened and and a personal representative appointed to convey the interest of the deceased co-tenant.
If the co-tenants cannot agree on the sale or management of the property, a court action can be filed for a court order to partition (subdivide) the property and award the subdivided units to each of the co-tenants, usually based on the percentage each co-tenant owns. If the property cannot be subdivided, the court can order the sale of the property and the net proceeds divided between the co-tenants, based on the percentage each co-tenant owns. The court may make any order deemed necessary to completely adjudicate the dispute.
It is common for tenants in common to enter into an agreement regulating their rights and duties. A common example is a jointly owned vacation homes. The agreement may (1) grant a right of first refusal to the other co-tenants should one of the co-tenants wish to sell, (2) provide for the sale or lease of the property by all co-tenants, (3) set out the terms of periodic use by each of the co-tenants.
Joint tenancy is also a from of co-tenancy, where two or more persons may own a property. The important difference is that a joint tenancy includes the right of survivorship. On the death of a joint tenant, the surviving joint tenant(s) will own 100% of the property, without the need for probate to appoint a personal representative, and a personal representative's deed to convey the interest of the deceased joint tenant. For example, if three persons own a property as joint tenants, then on the death of the first dying, the remaining two owners will continue as joint tenants.
The very strict requirements of C.R.S. 38-31-101 must be followed to create a joint tenancy. The abbreviation "JTWROS" and the phrases "as joint tenants with right of survivorship" or "in joint tenancy with right of survivorship" can be used.
There is not joint tenancy if this is not done. Probate must be opened to convey the interest of a deceased co-tenant. This is a very common error when the wrong choice of tenancy is made in the contract, or when the deed is signed without checking that the property is conveyed to the Buyers as joint tenants.
Co-tenants, at any time, can covert their tenancy to joint tenancy by deeding to themselves as joint tenants, provided that the correct terminology is used.
The interests held by joint-tenants, like co-tenants, is presumed to be equal, but the joint tenants can agree on unequal interests in the deed conveying the property to them.
On the death of a joint tenant, a certified copy of the death certificate, or verification of death, together with a supplementary affidavit, must be recorded to prove the death of the joint tenant and to show that the surviving joint tenant(s) are the owners of the property.