Co ownership of property in California can be accomplished by many methods ranging from community property (for married couples) through tenancy in common, to ownership by corporations, limited liability companies, partnerships and trusts. After community property, JOINT TENANCY is probably the most commonly used method…and the most abused. While holding property as Joint Tenants is easily accomplished and, indeed, often automatically done for customers by title companies, real estate agents and inexperienced CPAs and lawyers, in reality it has significant problems and is seldom the best way to jointly hold property. Put simply, both legal and tax issues often arise to the shock and, at times, dismay, of those who “took the easy way” and decided to keep jointly owned property as joint tenants.

This article shall discuss the basic law of joint tenancy and analyze both the benefits and the detriments of holding property in this manner. It shall also suggest various alternative methods of holding title which solve many of the problems of joint tenancy.


Definitions and Basics:

The reader is invited to first review the article Real Estate Ownership and Transactions in the United States which discusses generally the methods of owning and buying and selling real estate in this country. This article shall assume the reader has already read that more basic article.

Co ownership of property simply means two or more people or entities owning title to property.

Co ownership can be accomplished in many ways. Husband and wife, in California, normally own property as community property, the title deed stating, “X and Y, husband and wife as community property,” and this method has significant advantages described below. Only a husband and wife can jointly own property as community property.

The most common methods of co ownership of property aside from community property are tenancy in common and joint tenancy. Tenancy in Common is ownership of title to property by two or more persons or entities in any percentage amount. It is “undivided” ownership which means that each person owns a percentage of the entire property. Thus, if you own 40% of a property in tenancy in common, you do not own any particular 40% of the lot but 40% of an undivided entire property. (Compare this to condominiums in which you are given a particular title to a particular space within a larger lot.) The reader should review the article on Tenancy in Common Ownership of Property in San Francisco and Bay Area Communities.

Joint tenancy is equivalent to tenancy in common with two vital differences. First the co ownership must be equal, e.g. each joint tenant owns the same percentage interest. Second, unlike tenancy in common, when one dies owning property as a joint tenant, one’s portion immediately and automatically is transferred to the other joint tenants by operation of law. This is called the right of survivorship. This right of survivorship supersedes contrary provisions in a Will or Trust, for it automatically vests at the moment of death…before a will can effect disposition of the property. This causes significant problems in litigation, as discussed further below. If one holds property as joint tenant, but commits some error or takes certain acts in the holding of the property discussed below, it automatically converts the property to tenancy in common, even if unintentional and the holder of title and the other joint tenants do not know of the act-another problem discussed below.

Title companies like joint tenancy since they are familiar with it. It does have some advantages-but those advantages, discussed below, are often outweighed by serious difficulties, often created by the relative ignorance of both the owners and the title companies as to the legal effect and dangers of holding property in joint tenancy.


The Advantages of Joint Tenancy:

1. Ease. Title companies, realtors, and many attorneys are “used” to using joint tenancy as a way for any two or more persons or entities to own property. All that need be done is to place on the title deed, “X and Y, as joint tenants” and the property is effectively owned as joint tenancy. After hundreds of years of creating such title documents, the professionals in the field feel comfortable with that method. Attorneys are not needed to create the necessary title, unlike trusts, partnerships or corporations, thus money was apparently saved.


2. Transfer Immediate and Automatic Upon Death. There is no need to probate the estate or perform other court hearings to achieve the transfer to the other joint tenants upon death. By merely recording notice of the death of the joint tenant, the survivors increase their holdings by the amount of the decedent’s percentage interest, equally. (If I die and owned property as a joint tenant equally with two other joint tenants, each of their one third interests automatically increase by half of my one third, thus each thereafter owns fifty percent, as joint tenants.)


3. No Attorney Fees Incurred for Probating the Property. Before the advent of revocable living trusts (See our article on Wills and Trusts) joint tenancy seemed an excellent method of avoiding what often amounted to thousands of dollars in probate fees paid to executors and attorneys. Indeed, this was the usual justification given to owners by realtors, title companies and banks. Since many couples now own property as community property or use revocable trusts, both of which eliminate all or most of the attorney fees, this justification has been largely eliminated but remarkably few people realize it. Nevertheless, it is clear that the cost of creating a joint tenancy deed and the cost of vesting title in the survivors is minimal compared to probate costs or the cost of creation of a trust, corporation or partnership.


4. Predictable. Joint tenancy is one of the oldest methods of owning property and the case law involving it is hundreds of years old. One could easily predict what would occur in the future should legal disputes arise.


5. Apparent Simplicity. Since all one needs to do to create joint tenancy is to record a title deed executed by all joint tenants stating, “X and Y (and others) as Joint Tenants” and since title companies and realtors are used to such title holding, it seems easy and simple to create this form of ownership and can be done in just a day or two.


The Disadvantages of Joint Tenancy:

1. Restricted Ownership. Some institutions, which do not “die,” may not be able to own property in joint tenancy. This restricts many of the structures so useful in family and estate planning.


2. Unexpected Rigidity in Ownership. Joint tenancy is not altered by will or contract. The title document will void all later arrangements of the parties unless they somehow terminate the joint tenant deed legally. Thus it is one of the most common cases in court that someone either forgets that property is in joint tenancy or is misinformed and writes a will hoping to protect the family who discover, to their horror, that the will or contract is void as to the property upon death. Typical example: someone owns joint tenancy with an ex spouse, does not change the deed, dies, and the new spouse or children are “wiped out” by the old joint tenancy deed.


3. Unity of Title Rule: This complex rule requires that each joint tenant must own the same precise title since each owns an undivided interest. If that unity is broken, then the property is converted to tenancy in common, even if the person breaking the unity and the other joint tenants do not know. Thus if I borrow and use the joint tenancy property as collateral, not even telling the other joint tenants, and have a deed of trust recorded on “my interest” this can be held to have voided the joint tenancy, even if I pay it back. Imagine the chaos this could cause since the other joint tenants, thinking that they would automatically get my share if I die, would have made their own plans accordingly. Instead, the property is now a “secret” tenancy in common and could end up going to my family or others according to my will. There are numerous cases about this problem, with each jurisdiction having different solutions and holdings, but suffice to state that it can lead to very unfair results which are often unintentional on the part of the parties.


4. Tax Disadvantages There are several tax problems with joint tenancy, especially when compared to community property holding, but one example should suffice to indicate the complications and costs that this “simple” method of ownership can create.

One pays income tax (capital gains) on appreciation on property. The initial cost is the “basis” of the property and one pays taxes on the difference between sales price and basis. However, upon death there is a stepped up basis to value of date of death. Example: I purchase a property for one hundred thousand dollars and sell it for three hundred thousand. There is a two hundred thousand dollar capital gains and taxes of about 30,000 would be due. However, if I die and my son inherits the property, the basis is changed to value as of date of my death ($300,000) and if my son sells the property the next day there is no capital gains tax due at all.

Assume I own the property in joint tenancy with you. You die. Do I get a stepped up basis on the property? Yes, but only for one half since I already owned one half as a joint tenant.

That means the taxes in the example above would be fifteen thousand dollars.

Now, if I owned that property as community property and my wife died. I get a stepped up basis in the entire value even though I owned one half of the property. A special exception to the law for community property allows a full stepped up basis in community property…but only a one half stepped up basis in joint tenancy. If you had owned the property with your spouse as joint tenancy instead of community property, you just wasted fifteen thousand dollars.

But in reality most property in this area is worth far, far more than three hundred thousand, and the losses are normally in the hundreds of thousands due to this common error.


5. Lack of Benefit. By use of revocable trusts, the corporate structure, family partnerships and other easily drafted documents, almost all the benefit of avoiding probate can be achieved for the same property without the disadvantages of joint tenancy listed above. Put simply, the law has altered over the past five hundred years and joint tenancy, which was useful in 1850, is now a dangerous and not very useful way to jointly own property.


6. Lack of Control. A joint tenancy can be destroyed if any one of the joint tenants decides to do it. Under Civil Code section 683.2 (a) a joint tenant, without the consent of other joint tenants, may sever his or her interest in joint tenancy by execution and delivery of a deed conveying the interest to a third party; by executing a written instrument evidencing intent to sever the joint tenancy or execution of a written declaration that the joint tenancy is severed. The document must be recorded. But this means that your plans may be suddenly destroyed at the will (or whim) of the other joint tenants at any time.

This office confronted that issue when a dying client suddenly discovered by chance that his brother (and co owner in joint tenancy) had already severed the joint tenancy (not telling our client) and that our client’s entire estate plan would have been distorted. He had not known that half the value of the property he owned as a joint tenant, whose value exceeded one million dollars, was suddenly not going to his brother but would end up going into the residue of this estate in ways he did not want. That evening, with the client going into and out of consciousness, desperately trying to rewrite his will, is one that his family will long remember. As his wife later said to the writer, “What would have happened if we hadn’t been lucky enough to find out that night?”

“Simple,” I told her, “you would have paid an additional two hundred thousand dollars in taxes for no reason whatsoever.”

Why do people still use it?

Because banks, title companies, realtors, and inexperienced professionals have used it over the decades and have not bothered to really think it out. Because it is easy to create and one does not have to go to a lawyer to create a corporation or partnership or learn how one can achieve the same things more efficiently and without danger. In short, because it is “easy.”



Depending on the circumstances, trusts, partnerships, corporations, limited liability companies and community property can all be used to better accomplish the same goals and which allow better tax planning, control of your ownership, and resolution of disputes. For instance, in a family partnership agreement, it there is a dispute, one can provide for private arbitration of disputes which allows a judgment just as effective as a court of law but avoids the expense and publicity of a public trial. Instead of a dispute lasting years and costing hundreds of thousands of dollars, a dispute is resolved in months and costs a third as much.

There are times when joint tenancy can be useful. If one has no time to create a quick survivorship plan and the value of the property is small, it can be an easy and fast way to create survivorship. But in the overwhelming majority of cases, family and tax requirements make joint tenancy less preferable to more modern methods.



It is perhaps ironic that a method of holding property that was innovative and useful in England in 1805 is not only still widely used in California in 2003 but used without understanding its benefits and disadvantages. It is rather like using a horse and buggy on a modern freeway. It can be done and one does get there: but without the many advantages later developments have made available. Law is like any other field of endeavor. It changes and in many cases improves over the centuries. Joint tenancy is easy to create, perhaps, but hard to manage and very dangerous to control compared to later developments available for the intelligent owner of property.

The wise consumer shops the market before buying a product. The wise property owner should shop the other available ways to hold property before “buying” joint tenancy.