National Real Estate Practice Exam

What type of property ownership allows multiple individuals to own fractional shares of a property's value?

1. Joint tenancy

2. Tenancy in common

3. Condominium

4. Cooperative

The correct answer is: Tenancy in common

The concept of fractional ownership is best exemplified by tenancy in common. In this type of property ownership, multiple individuals can own shares of a property independently, which means each owner can have a different percentage of ownership. These shares can be unequal, allowing for flexibility in how property investments are structured. Each tenant in common has the right to use the entire property, regardless of the size of their particular share, and they can sell or transfer their interest without needing the consent of the other owners. This form of ownership is beneficial for individuals looking to invest in real estate without having to purchase an entire property themselves. In contrast, joint tenancy generally requires that all owners have equal shares, and it includes rights of survivorship, where the deceased owner's share automatically passes to the other owners rather than being inherited. Condominiums involve individual ownership of units along with shared ownership of common areas but do not typically entail fractional shares in the same sense as tenancy in common. Cooperatives involve ownership through shares in a corporation that owns the property, which is quite different from holding direct ownership stakes. Thus, the structure of tenancy in common aligns perfectly with the idea of multiple individuals owning fractional shares of a property’s value.