Determine Individual Ownership Interests

☝️ Heads up

This subsection is not relevant for co-ownership arrangements structured as JTWROS. In Joint Tenants with Right of Survivorship, each co-owner holds an equal and undivided interest in the property. Unlike TIC, you can't have unequal ownership percentages.

Co-buyers who choose to hold Title as Tenants in Common must decide how to split ownership interest in the property between or among co-owners. You can divide ownership equally or unequally. Individual ownership splits, expressed as percentages, should be recorded in a Co-ownership Agreement, and obviously, they must add up to 100%.

If you choose to split ownership interest equally, the math is easy, and you can move on. If you want to allocate ownership unequally, there is no official formula to determine ownership percentages. The decision lies with you. What's "fair"? Fair is subjective, and my interpretation may be different from yours.

To guide the discussion with your co-buyer(s) on determining individual ownership percentages, you can start from the baseline of equal splits and consider factors that justify increasing or decreasing each co-owner's share.  ‍

Objective factors:

• Use of the property (occupancy, space, time)
• Participation on the mortgage
• Up-front financial contributions to the purchase (mortgage, closing costs, prepaid expenses)
• Ongoing financial contributions (mortgage, insurance, taxes, bills, etc.)
• Non-financial contributions (work, management, care-taking)

Subjective factors:

• Fairness
• Preferences
• Special considerations

Ultimately, it's important to land on splits that all co-owners are comfortable with. You want to kick things off on the right note. If one co-buyer feels that they've drawn the short straw, it creates a risk of resentment. Resentment and multi-party asset ownership are a recipe for damaged relationships and potentially even financial loss.

Recommended Reading‍

‍CoBuy Blog: Splitting co-ownership of a home