TENANTS IN COMMON
Most people in real estate know that one way property can be owned is as Tenants in Common.
Tenants in Common consists of two or more people who own a separate interest in real property. That separate interest can be transferred, assigned, or mortgaged to a third party. That is, unless the tenants in common have an agreement that says otherwise.
When one of the Tenants in Common passes away their interest in the property transfers to their heirs. Contrast that with Joint Tenancy with Rights of Survivorship (JTWRS). With JTWRS, the interest automatically transfers to the respective living property owner(s).
How is Tenant in Common ownership handled in Arizona when it comes to property taxes?
When it comes to property taxes, Tenants in Common have joint and several liability. This means you each share liability for the full amount of the taxes whether the other party pays or not.
While this could mean that you are stuck with the full tax bill, you have some options.
Choose Fellow Tenants Wisely
First and foremost, know who the other property owners are. Can you trust them?
If you’re not satisfied with the arrangement for whatever reason, you could sell your interest in the property. While you typically have the right to do this, it may be met with some opposition by the other owners depending on the circumstances.
The Estate Partition Option for Tenants in Common
What if you get into a situation where one of the property owners says they’re not going to pay their pro-rata share of the taxes? Well, you can mention that you could force the sale of the property in an estate partition.
Depending on whether they still want the property or not, that mild threat may be enough leverage to get them to pay their share of the property tax.
If you end up deciding to follow through on an estate partition action, there would be a hearing in Court to determine each owner’s individual interest in the property. Here is where you could make the argument that you should be reimbursed for the other owners failure to pay their fair share of the property taxes.
If you and the other owners agree to selling the property, it may be a fairly straightforward and reasonably inexpensive process to splitting the property. However, if there is conflict and you need to involve attorneys, the price goes up from there.
Additionally, the partition statutes only cover what’s needed for the partition of the property. If you want to argue for attorneys fees and other damages, those claims will have to properly be made in addition to the partition claim.
If you have related challenges or challenges just like these, please give Durfee Law Group a call at 480.324.8000. We can help.