A Tenants in Common Agreement: Clarity and Protection for Co-Ownership of Real Property

The dream of homeownership in Colorado often involves shared aspirations, such as purchasing property with a friend, inheriting a family cabin, or investing in a vacation home with trusted partners. The excitement of co-owning real property is undeniable, and it’s most successful when managed by a seasoned lawyer.

A Tenants in Common Agreement is not just valuable; it’s an essential document for any Colorado homeowner involved in co-ownership. It provides the clarity and legal protection needed for a successful co-ownership experience. GLO crafts tailored agreements that address the unique dynamics of your co-ownership situation.

What is the Importance of a Tenants in Common Agreement?

In Colorado, when multiple individuals own property jointly without specifying the ownership structure (such as joint tenancy with right of survivorship), they are usually presumed to be tenants in common. As tenants in common, each owner has an undivided interest in the entire property, regardless of their ownership percentage. This means that each co-owner has the right to possess and use the entire property, not just a designated portion. While this arrangement may seem equitable, it lacks a framework for managing daily operations, allocating expenses, or resolving disagreements about the property’s use or future.

A partition action is a legal remedy available to any co-owner who desires to sever the co-ownership, essentially forcing a division or sale of the property. There are two main types of partition actions: “partition in kind,” where the court physically subdivides the property (commonly used for large tracts of land), and “partition by sale,” where the court orders the property to be sold, often through a sheriff’s auction, and the proceeds are divided among the owners. The court has broad discretion in partition cases, and the outcomes can be unpredictable, leaving many parties unsatisfied. An experienced lawyer can ensure that all relevant circumstances are addressed in the tenants in common agreement, facilitating a smooth and harmonious co-owning arrangement.

How a Lawyer Ensures a Smooth Co-Ownership Experience

Co-ownership beyond partition presents numerous practical matters to address. How will property taxes, insurance, maintenance, and utility bills be shared? What happens if one co-owner cannot or will not contribute their share? What if one co-owner wants to make a major renovation, but another disagrees? A lawyer can help address these questions upfront through an agreement.

A significant risk for homeowners is the lack of a clear exit strategy. Life circumstances change, relationships evolve, financial situations shift, and personal needs dictate different living arrangements. What if one co-owner wants to sell their share, but the others don’t, or can’t afford a buyout? Without a pre-defined mechanism, such as a right of first refusal, buyout clauses, or a structured sale process, the only recourse is often the forced sale through a partition lawsuit. For more information on partitions, please read our blog Understanding Tenants in Common Agreements and the Pitfalls of Partition. A knowledgeable lawyer can help provide the legal framework to address these issues upfront, establishing clear decision-making protocols, outlining fair procedures for dissolving co-ownership, and ensuring a seamless co-owning experience.

How GLO Can Help

For homeowners navigating the exciting yet complex world of co-ownership in Colorado, proactively establishing a Tenants in Common Agreement is the most effective way to secure your interests and foster a harmonious arrangement. At GLO, our experienced Colorado real estate attorneys specialize in crafting bespoke agreements that address the unique dynamics of your co-ownership situation. Visit Tenants in Common/Co-Habitation Agreements and Partition Buyout Agreements to read more on how GLO can help you.

GLO drafts Tenants in Common Agreements that clearly define each co-owner's percentage of ownership, outline financial responsibilities for expenses and improvements, and establish fair and efficient procedures for decision-making regarding the property. Crucially, we incorporate comprehensive exit plans, including buyout options, rights of first refusal, and clear terms for dissolving co-ownership, thereby helping you avoid the costly and emotionally taxing process of a partition lawsuit. By working with GLO, you gain the clarity, protection, and peace of mind necessary to make your co-ownership experience a success.

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GLO has prepared this blog to provide general information on legal issues that may be of interest. This blog does not provide legal advice for any specific situation and this does not create an attorney-client relationship between any reader and GLO or its attorneys. GLO engages clients only through specific signed fee agreements. GLO does not guarantee any results