Undivided Interest (Real Estate): 11 Things (2023) You Should Know (2023)

When you think of owning real estate, you probably think of owning it with complete undivided interest.

That is, the land has just one owner, and the process of buying, selling, and making decisions is relatively uncomplicated.

Yet, it’s more common than people think to have multiple owners for one piece of land.

For instance, related or unrelated business partners, heirs of land, or a married couple can all hold land together.

All of these relationships create a scenario where you may have more than one owner of a property, and co-ownership can quickly become complicated.

Whether you’ve opted for co-ownership (marriage or business) or it’s been thrust upon you (inheritance), it’s important to know how sharing real estate can impact your ability to act.

Particularly when undivided interest comes into play.

So, in this blog, we’re talking about undivided interests, what they are, and how you can free yourself from them if necessary.

Keep reading to learn more.

1. What is undivided interest in real estate?

In real estate, an undivided interest refers to a co-ownership scenario whereby each owner owns a percentage share in the property.

It occurs in situations where a piece of real property is held by two or more persons without being subdivided or divided among the owners.

Thus, the land itself is a single undivided parcel and every owner has an equal right to enjoy the entire property.

However, despite having an equal right to enjoy the property, each owner only owns a percentage share in the lot.

Think of it like owning shares in a company.

2. What are the three different types of undivided interest in real estate?

There are three types of undivided interest:

Undivided Interest (Real Estate): 11 Things (2023) You Should Know (1)tenancy in common

Undivided Interest (Real Estate): 11 Things (2023) You Should Know (2)joint tenancy

Undivided Interest (Real Estate): 11 Things (2023) You Should Know (3)tenancy by the entirety

We’ll detail each in the next three sections.

3. What is tenancy in common?

Tenancy in common is a form of co-ownership that is often used between unrelated individuals.

Tenants in common may own unequal shares of a property, but if they are not specifically designated (3/4 versus 1/4) then they are presumed to be equal or proportionate.

Tenants in common are said to hold “undivided” interests with the other co-owners.

Instead of owning one physical half of the property (the west half or the east half), they are rather considered to own a certain interest in the entire parcel of land.

4. What is joint tenancy?

Joint tenancy occurs when two or more parties own property jointly.

That is joint tenants have equal ownership in the property.

Furthermore, joint tenancy means that when an owner dies, the owner’s rights and interests pass to the surviving owner(s).

This is called the right of survivorship.

The rules for joint tenancy vary from state to state, so be sure to check the laws locally.

5. What is tenancy by the entirety?

This type of ownership is available only to married couples.

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It allows them to own a property as a single legal entity, and the right of survivorship exists in case one of the spouses dies.

The primary advantage of this type of tenancy is that only creditors of the couple can attach and sell interest in the property.

It cannot be used to pay an individual spouse’s debt, and a spouse may not get rid of his/her interest in the property without the consent of the other spouse.

6. What is community property?

This term applies to married couples who own property in any of the following nine states:

Undivided Interest (Real Estate): 11 Things (2023) You Should Know (4)Arizona

Undivided Interest (Real Estate): 11 Things (2023) You Should Know (5)California

Undivided Interest (Real Estate): 11 Things (2023) You Should Know (6)Idaho

Undivided Interest (Real Estate): 11 Things (2023) You Should Know (7)Louisiana

Undivided Interest (Real Estate): 11 Things (2023) You Should Know (8)Nevada

Undivided Interest (Real Estate): 11 Things (2023) You Should Know (9)New Mexico

Undivided Interest (Real Estate): 11 Things (2023) You Should Know (10)Texas

Undivided Interest (Real Estate): 11 Things (2023) You Should Know (11)Washington

Undivided Interest (Real Estate): 11 Things (2023) You Should Know (12)Wisconsin

These are referred to as “community property states.”

Any property (cash, real estate, acquired assets, etc.) accumulated during a marriage is “owned” by both parties; it doesn’t matter whose name is on the ownership papers or deed.

Knowing this can be a good reminder.

While your spouse should ultimately be one of the most trusted people in your life, splitting property while divorcing will be difficult.

Purchasing property with another party is always a big decision, and you should consult legal and tax advisors to ensure you’re making smart decisions.

7. What are examples of undivided interest in real estate?

There are countless reasons people could own land collectively.

However, that doesn’t mean it always works out in everyone’s favor.

Here are some examples of undivided property in real estate.

Undivided Interest (Real Estate): 11 Things (2023) You Should Know (13)Three siblings own two quarters (320 acres) of land together as Tenants in Common.

Sibling #1 farms the land and pays a pro-rata share of rent to siblings #2 and #3.

While the quality of the land is currently good, it would be improved with drain tiling, which removes excess water from soil below the service.

Drain tiling costs $1,000/acre.

As a result, the sibling farming the land is advocating to get the land drain tiled at a cost of $320,000.

This means that each sibling would need to contribute in excess of $100,000 in order to get the drain tiling done.

Because siblings #2 and #3 do not have sole ownership of the land, neither of them wants to make that type of investment

Undivided Interest (Real Estate): 11 Things (2023) You Should Know (14)Five cousins inherit 12 acres of land when their grandpa passes away.

Shortly after the funeral, one of the cousins wants to sell the land because he is in financial trouble.

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However, the other four cousins are content receiving rental income and do not want to sell the land.

8. Can you sell your undivided interest?

The short answer is yes, and the long answer is how.

You have the legal right to sell your undivided property.

The problem is finding a market for it.

Others may not desire to step into your shoes and have co-owners of your property.

Often, people with undivided interests in real estate are handling those interests with relatives or other close associates, which can be tricky.

This typically isn’t a selling point for buyers.

The best thing you can do is consult a real estate attorney, especially one who has handled undivided interests previously.

They can check the fine print and let you know under what circumstances you can sell your property.

You never know what could come up or make it especially complicated!

Openly and honestly discuss your desires pertaining to this land with your attorney.

They can give you some perspective about your options, and this can give you a path forward.

9. I’ve thought about keeping my undivided interest share, but I’m just not happy with that option. What are the alternatives if I can’t sell it?

Alright, so you know that it’ll be difficult to sell, but keeping the land just isn’t in the cards for you.

What can you do to get out of the arrangement altogether?

Undivided Interest (Real Estate): 11 Things (2023) You Should Know (15)Try to sell it to one of the co-owners of the same land.

Let’s face it.

Depending on what type of land this is, it’s likely to be more attractive to someone who already owns an interest in some of it or knows the people who own the other interest in it.

See if there’s someone in the group who would be willing to take on your share of the interest.

The logistics for this route will be minimal compared to almost everything else on this list.

Undivided Interest (Real Estate): 11 Things (2023) You Should Know (16)Buy your co-owners share.

This is also a fairly simple solution.

If the main problem you have in the arrangement is the undivided interest (not the actual land-owning itself), then you could offer to buy out your co-owners.

This is a great solution if you are the most interested party in having or developing the land, and your co-owners do not have the financial ability to acquire your share.

Undivided Interest (Real Estate): 11 Things (2023) You Should Know (17)Partition the land through legal agreements and documents.

In this scenario, undivided interests become divided interests and create individual sole title owners.

Each owner will receive their share of deeded land with specific boundaries.

Unfortunately, we’re making it all sound a lot easier than it really is.

While the process can be neat and clean, it can also be pretty messy.

It ultimately depends on the willingness of the undivided interest partners to determine how easily the land can be divided, so everyone can receive their fair share.

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Read more about what partitioning undivided interests looks like in #10.

Undivided Interest (Real Estate): 11 Things (2023) You Should Know (18)Go to court to partition the land.

Yes, you’ll need to partition the land with legal agreements and documents anyway, but you may actually need to go to court to decide how to partition it.

This can happen if the owners of the land can’t get along.

Do what you can to avoid this, but if you’re in this position, make sure you have good legal counsel on your side.

Again, read more about this process in #10.

10. What is a partition action in real estate?

Above, we suggested that you partition the land through legal agreements and documents.

This is often done when you can agree with your fellow owners about how to use the land.

However, when this isn’t the case, the law offers something called a partition action, which can be brought to subdivide the property into individual shares among owners.

Instead of one person getting the last cupcake, you just cut it in half.

There are two types of partitions: voluntary partition and judicial partition.

Voluntary partitions occur when co-owners voluntarily agree to partition their ownership rights and divide the property.

However, sometimes not everyone agrees, and in this case, one owner may file a lawsuit.

If this occurs, then a judicial (or court-ordered) partition can occur.

It’ll be defended based on various legal principles, like statutes of limitations, laches, and public policy.

It may go without saying, but it’s often in your benefit to avoid time and money spent in court.

If you’re able to work it out with co-owners outside of the courtroom, then that’s your best bet.

11. How do legal partitions take place?

If the land in question will be partitioned, it won’t be as simple as snapping your fingers.

Regardless of whether you have a voluntary partition or a judicial partition, the actual way your land is severed can occur by two methods: a partition in kind or a partition by sale.

Here’s what each of those means:

Undivided Interest (Real Estate): 11 Things (2023) You Should Know (19)Partition in kind:

This is known as an “actual partition.”

It severs the individual interest of each joint owner so that each party ends up controlling an individual and divided portion of the property.

It’s essentially a subdivision.

This is a great option when parties get along but disagree about the use of the land.

Each person can take the divided land as their own and record that division with the county clerk.

Undivided Interest (Real Estate): 11 Things (2023) You Should Know (20)Partition by sale:

This type of partition is known as “licitation” or “succession.”

It is done by selling the entire property and then dividing the proceeds among the owners.

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It is often used when partition in kind is difficult to perform or when parties cannot agree.

When this occurs, each party has the opportunity to take their share of the proceeds and put it toward their own separate properties.

Final thoughts

Undivided interests in real estate can cause conflict between those you’re closest with, and you want to come out ahead of it.

Don’t hesitate to get legal or financial advisors involved if you’re not sure what the best path forward is.

Additional Resources

If you are looking to buy affordable land, you can check out ourListingspage. And before you buy land, make sure you check out Gokce Land Due Diligence Program. Don't forget to check out my latest Gokce Knowledge Class: 31 Lessons I Learned Selling My First 500 Properties Online.

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Disclaimer: we are not lawyers, accountants or financial advisors and the information in this article is for informational purposes only. This article is based on our own research and experience and we do our best to keep it accurate and up-to-date, but it may contain errors. Please be sure to consult a legal or financial professional before making any investment decisions.

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Erika is a former Affordable Housing Director for the City of New York turned full-time Land Investor. She used to help New Yorkers find affordable housing, now she helps people find affordable land around the US.

Prior to starting Gokce Capital, Erika received a Bachelor of Architecture from the University of Southern California and a graduate degree in Urban Policy from Columbia University. She worked as both an architectural designer and engineer in New York before joining the New York City Department of Housing Preservation and Development.

Erika currently lives in the New York Metropolitan area with her spouse, daughter and cat. She is originally from Chicago and still considers herself a midwesterner at heart.

Erika also loves to read, write and travel (fun fact, she has visited all 50 states and more than 30 countries!). Her new book, Land Investing Mistakes: 11 True Stories You Need To Know Before Buying Land, is now available on Amazon.

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What does 50% undivided interest mean? ›

An undivided interest means that each tenant in common owns a part of the property but there is no way to identify which part he or she owns. All the owners of tenancy-in-common property have the right to use and possess the property during their lives, no matter what percentage each person owns.

What does it mean to have an undivided interest in property? ›

An undivided interest means that two or more persons have an interest in a property held under the same title. The undivided interest encompasses the whole property, and its holders have equal rights to the entire property.

What is a disadvantage of tenancy by the entirety? ›

The disadvantage is that creditors can attach one tenant's property to satisfy the other's debt. Some states give married couples another option to own property jointly and avoid probate, but also have protection from creditors.

What relationship exists when two or more persons own undivided interests in property? ›

Tenants in Common exist when two or more people own an undivided interest in the whole of the property. That is, they each own a percentage share, which may or may not be equal, but does not represent a specific physical part of the property.

Can an undivided interest over a thing be sold? ›

The short answer is yes, and the long answer is how. You have the legal right to sell your undivided property. The problem is finding a market for it. Others may not desire to step into your shoes and have co-owners of your property.

What is an undivided interest without the right of survivorship? ›

Tenancy in Common

However, tenants in common still have an undivided interest in the property, meaning that they have the right to use and enjoy the entire property. There is no right of survivorship. If an owner dies, that owner's interests pass on to his or her heirs.

What are the types of undivided interest? ›

Undivided Interest -- Property

The three basic types of undivided real estate interest are joint tenancy, tenancy in common and tenancy by the entirety.

What is undivided interest with the right of survivorship? ›

Under the right of survivorship, each tenant possesses an undivided interest in the whole estate. When one tenant dies, the tenant's interest disappears and the others tenants' shares increase proportionally and obtain the rights to the entire estate.

What is the difference between divided and undivided interest? ›

Unlike divided co-ownership, undivided co-ownership is not physically separated into separate private and common portions. If you decide to purchase this type of property, you will be acquiring a percentage of an entire building.

What is a disadvantage of joint tenancy ownership? ›

The primary pitfalls are the need for agreement, the potential for assets to be frozen, and loss of control over the distribution of assets after death. Tenancy in common is an alternative to joint tenancy that avoids some of its drawbacks.

What are the advantages of tenants by entirety? ›

Pros Of TBE

Tenancy by entirety provides limited asset protection. Creditors can't use the property as collateral to satisfy a debt. It prevents one spouse from putting a lien on the home or selling their ownership to a third party. It also provides the right of survivorship between spouses.

How many states have tenancy by the entirety? ›

Which States Recognize Tenancy by the Entirety. There are 26 states in the US which have tenancy by the entirety statutes on their books. The rules regarding tenancy by the entirety vary from state to state.

In which of the following does each owner have an undivided interest in the property? ›

Joint Tenancy: Joint ownership of property in which each co-owner owns an undivided interest in a portion of the whole property. Passes to survivor of the co-owners.

Is a type of ownership where each holds an undivided interest in the property? ›

In a tenancy in common (TIC), each tenant holds an undivided interest in the property. The co-owners have unity of possession, meaning that each owner is entitled to possession and use of the entire property, even though each holds only a fractional ownership interest.

Are tenants in common owners with an undivided share of the whole? ›

Tenancy In Common: This refers to equal or unequal undivided ownership between two or more people. A key characteristic of this type of ownership is that if one of the owners dies, their share is conveyed to their heirs, not the other owners who are still alive.

What is an example of sale of an undivided interest? ›

An example of an undivided interest would be purchasing a one-tenth undivided interest in 100 acres. The owner has not purchased 10 acres but one-tenth of the entire 100 acres. This entitles the co-owner to use the entire 100 acres; however, it also entitles the other owners to use the same 100 acres.

What is an example of a quiet title action? ›

As an example of a quiet title, there could be a Contractor whose primary job is flipping a house, meaning that Contractor A purchases a home for a low price, makes necessary home improvements, and then turns around and sells the home for a profit.

What does fractional undivided interest mean? ›

A fractional interest, often called an undivided interest, is an ownership interest in a percentage of an asset (generally real estate) that cannot be identified as a specifically defined portion of the asset.

How must joint tenants acquire their interests in jointly held property? ›

All co-tenants must acquire equal shares of the property through the same deed at the same time. With their equal interest, joint tenants also share equal financial responsibilities for the property, meaning all co-tenants are liable for any loans taken out against the property.

Does a deceased joint tenants interest in jointly held property pass to his or her heirs? ›

Each party in a joint tenancy has an equal interest in the property—the financial obligations as well as any benefits. A joint tenancy creates a right of survivorship, which means that if one party dies, their interest is automatically transferred to the surviving tenant(s).

Is tenants in common the same as undivided interest? ›

What is tenancy-in-common? A TIC interest is an undivided fractional interest in property. Rather than splitting the property into separate parcels, each owner has the right to use and enjoy the entire property.

What are the two primary types of interests in real property? ›

The two main types of property interests in real estate are possessory and non-possessory rights.

What are divided or undivided rights in real estate? ›

In a divided co-ownership, each owner owns part of the building, whereas in an undivided co-ownership, all owners are responsible for the entire building together. Purchasing an undivided co-ownership property requires a down payment of at least 20%. This can be a deterrent when the time comes to sell the property.

Which of the following is an undivided ownership in the property? ›

tenancy in common: A tenancy in common is a form of concurrent ownership between two or more persons, in which each has an undivided interest in the whole property.

Is the right of surviving joint tenants or a spouse to succeed to the entire interest of the deceased co owner? ›

Joint tenancy. A joint tenancy or joint tenancy with right of survivorship (JTWROS) is a type of concurrent estate in which co-owners have a right of survivorship, meaning that if one owner dies, that owner's interest in the property will pass to the surviving owner or owners by operation of law, and avoiding probate.

What does right of survivorship account mean? ›

Broadly speaking, if the account has what is termed the “right of survivorship,” all the funds pass directly to the surviving owner. If not, the share of the account belonging to the deceased owner is distributed through his or her estate.

Can undivided property be sold in Texas? ›


Any co-tenant may sell or convey his undivided interest in the property, but such sale will only convey an undivided interest, and the buyer or assignee will become a co-tenant with the other owners.

What does state of being undivided mean? ›

: not separated into parts or pieces : existing as a single whole : not divided. an undivided property. : complete or total.

What is undivided interest in mutual funds? ›

You buy shares that represent an undivided interest in the whole portfolio. The investment company attempts to earn money on the portfolio of securities and distributes the earnings to you and other investors as dividends. The dividends paid out are in proportion to the number of fund shares that you own.

What does the term undivided interest mean quizlet? ›

The term "undivided interest" means. each co-owner has the right to use the entire property.

Why avoid joint ownership? ›

In addition to failing to avoid probate, joint ownership can great other problems during lifetime. By jointly owning property, you may find yourself party to a lawsuit if your co-owner is sued or, the asset could be lost to a creditor of your co-owner.

What destroys joint tenancy? ›

They are: (1) recording a written declaration, (2) an express or implied agreement of the joint tenants to terminate the joint tenancy, (3) a partition judgment, (4) another form of judgment such as a divorce or probate action, or (5) an execution sale. (Miller & Starr 3 Cal. Real Estate § 11:27.)

What is the primary advantage of being a joint tenant with right of survivorship? ›

Advantages of joint tenants with right of survivorship

Avoiding probate. If an owner dies, assets transfer to beneficiaries without having to go through the time-consuming probate process, which can take months to complete.

What is an estate that is held by husband and wife called? ›

An estate by entirety–also called tenancy by the entirety–is a type of property ownership unique to spouses. Under this form of ownership, if a married couple purchases property together, each has an equal, undivided interest in the joint property.

What is the difference between Jtwros and tenants by entirety? ›

In a 'joint tenants with right of survivorship' situation, any two individuals can own the property. However, only married couples may own property in a 'tenants by the entirety' arrangement.

What does joint tenants by entirety mean? ›

Much like in a joint tenancy, spouses who own property as tenants by the entirety each own an undivided interest in the property, each has full rights to occupy and use it and has a right of survivorship.

What are the 5 elements of tenancy by the entirety? ›

Remember, for tenancy by the entirety to be applicable to the property and all its rules of concurrent ownership to apply to the married couple, several factors must be in place: the five unities— time, title, interest, possession, and marriage.

What is an example of tenancy by the entirety? ›

Understanding Tenants by Entirety (TBE)

For example, a husband could not decide to sell his ownership interest in a vacation home owned with his wife without the wife's consent. About half of the U.S. states allow tenancy by entirety for all types of property; a handful of states allow it only for real estate.

What does an undivided interest mean in oil and gas? ›

An undivided interest is an ownership that is co-owners have an equal right to enjoy the entire property. The property is not divided into identifiable sections. When someone owns less than 100% of the interest, they are said to own an undivided interest.

What is undivided working interest? ›

In an undivided interest arrangement, two or more owners of a working interest share revenues and expenses in accordance with their proportional ownership interests. In a divided interest arrangement, the owners of a working interest receive revenue and pay for expenses based on their ownership of specific acreage.

When each tenant owns an undivided fractional interest? ›

In a tenancy in common (TIC), each tenant holds an undivided interest in the property. The co-owners have unity of possession, meaning that each owner is entitled to possession and use of the entire property, even though each holds only a fractional ownership interest.

How much do oil companies pay to drill on your land? ›

Royalties on private lands are influenced by state rates. They generally range from 12–25 percent. Before negotiating royalty payments on private land, careful due diligence should be conducted to confirm ownership. Mineral ownership records are often outdated.

What if you find oil on your land? ›

Mineral Rights

If you own land, you have property rights. This means you can harvest anything that grows from your land, or build whatever you want on your land. To own oil or any other mineral coming from your land, you must have mineral rights in addition to your property rights.

What is an example of an undivided interest subdivision? ›

In an undivided interest subdivision, the homeowner owns 1) a residential property (as a co-owner) and 2) an exclusive right to use a portion of the property (such as an apartment unit). Note that subdivision types are defined by law and are not indicative of a particular design or architectural style.

How do you sell working interest in an oil well? ›

The only way you can sell a working interest in an oil well is if you are cash flow positive. Ideally, you should be making $500+ net profit after expenses. Anything less, and the risk to the buyer is too high.

What is pro rata undivided interest? ›

Pro Rata Ownership Interest means the percentage of the Broadband Facility owned by the Commission or another state entity designated by the Commission which is equivalent to the ratio of the bond financed grant to the Total Project Cost.

What is a undivided loan? ›

Your mortgage loan

For an undivided co-ownership. You will have to obtain a mortgage from the same financial institution as the other co-owners. Generally, each co-owner in an undivided co-ownership property has their own mortgage.

Is fractional ownership a good idea? ›

Bottom line. Fractional real estate investing is one way to boost your passive income and break into real estate investing. It's a great option for investors with limited funds who don't want the burden of owning and maintaining an extra property, but it does come with work.


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