In Law, what is an Undivided Interest?

Undivided interest is a term used to discuss different types of ownership of property, where one or more people own or inherit property together. Even if the owners don’t have equal financial shares of the property, they do each possess full interest or control of it and full rights to use it. This means that any decisions made about the property are made together, regardless of percentage owned. One person can’t decide to sell or change the property without the consent of the other owners. There are several forms of undivided interest and these include tenancy in common, tenancy by the entirety, and joint tenancy.

In tenancy in common, two or more people can share undivided interest in a property, but their shares don’t have to be equal. Instead, one person could own 10 or 30% of the property while another owns 90 or 70%. Despite these unequal shares of ownership, all decisions about the property still need to be made together. For example, it might be necessary for all owners to agree to sell. Also, even though people are not equal owners, they still may have equal rights to use the property at any time. In other words, they have equal interest in use, if not equivalent percentages of ownership.

A very common type of shared ownership is tenancy by the entirety, and this generally only applies to married couples or registered partners who share property together. Unlike tenancy in common, the interest owned is equal in most cases, particularly in community property regions. This form of undivided interest affects another part of the law, should one member of the couple die. Usually, ownership of the property transfers immediately and fully to the surviving spouse or partner, and very little legal maneuvering is necessary for this to occur. As with other forms of undivided interest, while both partners are alive, decisions have to be made jointly, and one person cannot make changes without at least the tacit consent of the other owner.

Joint tenancy is similar to tenancy by the entirety, but it doesn’t have to apply to only married couples or domestic partners. Instead, any number of people can share joint tenancy, and this arrangement of undivided interest is most often seen in elderly parents sharing residences with adult children. Like tenancy by the entirety, there is an advantage when the property is inherited. Usually probate isn’t necessary to move the property into the possession of the surviving joint tenants.

Ultimately, undivided interest means no owner has exclusive rights but all have equal rights. Shares owned don’t necessarily affect property rights or provisions about exclusivity. Some of these forms of ownership make property inheritance easier, but there can also be battles about how to dispose of property when two or more people have an undivided interest in it. This can occur in cases of divorce or simply when co-owners have different ideas about owning or changing property.