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Jointly owned property is any type of property that two or more legal entities have a documented use of and right to possession. Usually, this indicates property that is established in the names of both a husband and wife, but such property can also be possessed by unrelated individuals, corporations and individuals, or parents and minors for whom it is held in trust until the age of maturity. The various legal definitions under which such property is held include joint tenancy, tenancy by the entirety, and established trusts or forms of community property often defined state by state within the US. In the United Kingdom, jointly owned property is defined by the legal terms of either joint tenancy or tenancy in common, and requires that the deeds for the property contain the names of all invested parties.
There are several unique conditions that exist within the legal framework for joint owned properties that can serve to benefit the individuals involved or cause confusion if one or more of the owners dies. Joint tenancy property is often established to avoid the process of probate, which is the formal court-appointed distribution of the wealth of an individual upon his or her death. Joint ownership facilitates circumventing probate by also including a buyout agreement in jointly owned property, which allows any one of the owners to divest themselves of interest in it relatively easily.
The prospect of selling jointly owned property is often a subject of divorce proceedings. Within the UK legal framework, a joint tenancy indicates that both husband and wife each own the entire property and its value is split on a equal 50% basis when sold, and inheritance tax is also avoided. If the property is listed as a tenancy in common, a pre-established percentage of ownership per individual is set up when the deed is issued and can be any subset of 100% per individual upon which the owners agree.
Other issues can also arise with jointly owned property if a bankruptcy occurs for one of the owners. When a spouse of a married couple files bankruptcy individually in the US and a joint ownership of property exists, some property is exempt from the proceedings and other types are not. The primary home in which the couple lives is considered exempt within certain equity limits. Within the US state of Massachusetts as of 2011 this limit was $125,000 US Dollars (USD), which meant that any amount of equity over that required additional legal paperwork that could extend the limit to $500,000 USD. If the home was estimated at a value in excess of $500,000 USD as of 2011, it is not considered to be exempt and would be subject to sale as part of the bankruptcy proceeding, even if it was the primary residence.
Problems also arise with jointly owned property in the US if it is established as a joint tenancy with right of survivorship, often where a child is listed as a partial owner to help the parent manage the bills for the property. Should the parent die, issues can arise as to whether the child, as a joint owner, was intended to inherit the property. The property in this legal situation is also outside of normal court-ordered probate, but is considered to be subject to taxes. Such partnerships can result in lawsuits among surviving children to establish who has a right to the property.
The same troublesome situation can arise in the US if the jointly owned property is not land or a home, but instead is a trust fund or assets such as stocks and bonds. This is because the will that the deceased owner had drawn up in such cases is superseded by the legal division of the joint tenancy. Structures that are designed to facilitate easily liquidating a jointly owned property such as revocable trusts or a pay-on-death release of assets are equally open to lawsuits and disputes outside of usual probate procedures.
Problems also arise with jointly owned property if the death of an owner does not occur, but one participant in the agreement wishes to sell the property and others do not. Without a buyout agreement previously in place, usually the owner who does not wish to sell has precedent and is allowed to retain ownership. This sort of case may often arise where the owner who refuses to sell is living in the property, while the other owners are not and wish to obtain their value for the home in cash.
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