How to Get Out of Inherited Property Held As Tenants-in-Common

By John Stevens J.D.

Tenants in common is a type of ownership interest where two or more persons own a piece of property together. Unless a will specifies a different form of ownership, most states recognize tenants in common as the default form of co-ownership. An heir who inherits property as a tenant in common and who does not want to share a property interest with other co-owners has a few options, depending on the specific circumstances of each situation.

Selling to Other Tenants in Common

If the other tenants in common want to keep the inherited property, you may choose to sell your interest to them. Although cash is commonly offered in exchange for property, you may instead ask for a different form of property in exchange for your interest, such as a valuable coin collection or a painting the other co-owners may have inherited. If you owe the other owners money, consider asking them to forgive your debt in exchange for your property interest. Regardless of the terms of your agreement, your sale agreement must be in writing. If you do decide to negotiate a cash purchase, consider using either an escrow company or real estate attorney to handle the cash transfer.

Selling to Third Party

If the other tenants in common are unwilling or unable to purchase your interest in the property, consider selling it to a third party. As a tenant in common, you own a fractional interest, so you cannot sell the entire property -- each tenant in common owns less than the whole. For example, if the property is inherited equally by two tenants in common, each owns a 50 percent interest; if the property is owned by four tenants in common, each owns a 25 percent interest. But ownership shares need not be equal -- a will might provide that one tenant in common owns a 75 percent interest and a second tenant in common owns a 25 percent interest. Having a fractional interest in a piece of property can substantially reduce the potential market for selling your interest; potential buyers are not likely to want to share a single-family residence with strangers. There is no legal requirement that a fractional buyer must physically occupy the property, so a new owner could, for example, simply hold the fractional interest as an investment.

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Court-Ordered Partition

If the other co-owners will not purchase your fractional interest in the property, and you are not able to find a third party purchaser, you can ask a court for a partition by sale. The court can order the sale of the entire property by all co-tenants, even against their wills, with the proceeds from the sale divided according to each tenant's original interest. Partition by sale is typically used where the property cannot be physically divided without destroying the value of the property. A partition-in-kind is a court order directing the physical division of the property. For example, three people own 30 acres of farm land equally as tenants in common. If the court approves a partition-in-kind, the property will be divided into three separate ownership interests with each tenant in common owning one 10-acre portion outright. Partition is generally available only if it would be in the best interests of all tenants in common.

Renting Share of Property

Renting out a portion of the property may be a viable option. To rent a portion of the property, you should first obtain the permission of the other tenants in common, who have the right to possess the entire property. This is true even if one tenant in common owns a small fractional interest, such as 20 percent. If you rent a bedroom for example, and another tenant in common wants to use the bedroom, that co-owner could remove the tenant, who could then sue you. To avoid situations like this, obtain permission from all of the owners to rent out your portion of the property. To be enforceable, rental agreements and permissions from all affected co-tenants should be in writing to be legally enforceable.

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Tenants in Common in a Will
 

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