If you buy Arizona real estate with someone other than your spouse and the deed doesn’t say otherwise, you own it as tenants in common. In Arizona, tenants in common each hold a separate, freely transferable fractional share of the same property, with no automatic right to inherit from one another when a co-owner dies.1Arizona Legislature. Arizona Revised Statutes Title 33 Section 33-431 – Grants and Devises to Two or More Persons; Estates in Common; Community Property With Right of Survivorship; Joint Tenants With Right of Survivorship That default shapes how you share costs, who gets your share when you die, what a creditor can reach, and how you get out when the arrangement stops working.
How You End Up as Tenants in Common
Arizona’s statute is blunt: every grant of real property to two or more people creates an estate in common unless the deed says something else.1Arizona Legislature. Arizona Revised Statutes Title 33 Section 33-431 – Grants and Devises to Two or More Persons; Estates in Common; Community Property With Right of Survivorship; Joint Tenants With Right of Survivorship Three situations sit outside the default: grants in trust, conveyances to executors, and transfers to a married couple. Because Arizona is a community property state, spouses who take title together are generally treated as community property owners rather than tenants in common. Spouses who actually want a tenancy in common have to put that in the deed.
To escape the default any other way, the deed has to say so expressly. Joint tenancy with right of survivorship requires an explicit declaration. Community property with right of survivorship between spouses requires the same kind of explicit language. If the deed is vague or ambiguous, courts fall back to tenancy in common.
Ownership percentages don’t have to be equal. A 60/40 split, a 75/25 arrangement, or a three-way 50/30/20 division all work as long as the deed states the percentages. If the deed is silent, equal shares are presumed. Get the percentages right at signing, because they drive how expenses are split, how sale proceeds are divided, and what each share is worth.
What Each Co-Owner Can Do With the Property
Possession of the Whole
Every tenant in common has the right to possess and use the entire property, regardless of percentage. A 10% owner has the same right to walk in the front door as a 90% owner. No co-tenant can lock out or exclude another.
When one owner lives on the property and the others don’t, the one in residence generally doesn’t owe rent to the absent co-owners. Arizona recognizes an exception for “ouster,” where one co-tenant actively excludes another. A co-tenant who proves ouster may be entitled to an offset for their share of the property’s fair rental value, but the burden of proving ouster falls on the person claiming it. Simply choosing not to live there doesn’t entitle you to collect rent from the one who does.
Selling, Gifting, or Borrowing Against Your Share
One of the defining features of this ownership form is independence. You can sell your fractional share to a third party, gift it to a relative, or pledge it as collateral for a loan without asking the other owners for permission. They have no legal right to block the transaction unless a separate co-tenancy agreement restricts transfers.
That independence runs the other way too. A creditor of one co-tenant can place a lien on that person’s fractional interest. The lien reaches only the debtor’s share, but a creditor holding one can force a partition sale to collect, which means the entire property could be put on the market because of one owner’s unpaid debt.
Who Pays for What, and How to Get Reimbursed
Co-tenants share carrying costs in proportion to their percentages. Property taxes, mortgage payments, insurance, and necessary repairs to preserve the property all fall into the shared bucket.
When one owner pays more than their share of these obligations, Arizona law allows a contribution claim against the others. Courts have consistently allowed a co-tenant who covered mortgage payments or taxes out of their own pocket to recover the overpayment. Improvements that go beyond basic maintenance are treated differently. Contribution for an improvement is measured by the increase in property value the work created, not the amount spent. A $20,000 kitchen remodel that adds $15,000 of market value supports contribution based on $15,000.
Cosmetic upgrades and optional projects generally can’t be forced on other co-owners. Before spending money on anything beyond upkeep, get written consent from every co-tenant about who pays what share. Keep receipts and records for every expense; without them, a contribution claim becomes a credibility contest.
What Happens When a Co-Owner Dies
Tenancy in common carries no right of survivorship. When a co-tenant dies, their share does not pass to the surviving co-owners. It becomes part of the deceased owner’s estate and goes to whoever the will names. If there is no will, Arizona’s intestate succession rules take over, with the share passing first to descendants, then parents, then more distant relatives in a statutory order.2Arizona Legislature. Arizona Revised Statutes 14-2103 – Heirs Other Than Surviving Spouse; Share in Estate
The practical consequence is that you may end up co-owning with the deceased owner’s spouse, children, or more distant relatives you have never met. A clean two-person arrangement can turn into a three- or four-person dispute overnight.
The Beneficiary Deed Option
Arizona lets a property owner record a beneficiary deed naming who takes their interest automatically at death, bypassing probate entirely.3Arizona Legislature. Arizona Revised Statutes Title 33 Section 33-405 – Beneficiary Deeds; Recording; Definitions The deed can name multiple grantees and specify whether they take as joint tenants, tenants in common, or community property. It must be recorded with the county recorder before the owner’s death to be valid, the owner keeps full control and can revoke or replace it at any time, the last recorded version controls, and a will cannot override it. For a tenant in common who wants certainty about where their share goes, this is often the simplest tool.
What Happens If a Co-Owner Goes Bankrupt
A co-tenant’s bankruptcy is one of the most dangerous situations for the other owners. Federal law gives a bankruptcy trustee the power to sell not just the debtor’s share but the entire property if four conditions are met: partition in kind is impractical, selling only the debtor’s share would bring significantly less money, the benefit to creditors outweighs the harm to co-owners, and the property isn’t used for energy production.4Office of the Law Revision Counsel. 11 USC 363 – Use, Sale, or Lease of Property
If the trustee clears those hurdles through an adversary proceeding, you could be forced out of property you own free and clear. You would get your share of the sale proceeds, minus your portion of costs and tax consequences. You also have a right of first refusal, which lets you match the proposed sale price and keep the property out of a stranger’s hands.
Taxes Co-Owners Actually Run Into
Property Taxes
Arizona bills property tax to the property as a whole, not to individual owners. One bill arrives, and the co-owners are jointly responsible. Nonpayment produces a tax lien against the entire property, affecting every owner’s interest. On federal returns, each co-owner deducts the property taxes and mortgage interest they actually paid, up to applicable limits.
Gift Tax From Unequal Contributions
If co-tenants contribute unequal amounts to the purchase but hold equal percentages on the deed, the IRS can treat the difference as a taxable gift. Pay $300,000 of a $400,000 purchase and take only 50%, and you have effectively given the other owner $100,000. The IRS defines a gift as any transfer where you receive less than full value in return.5Internal Revenue Service. Gift Tax For 2026, the annual exclusion is $19,000 per recipient; anything above that requires filing a gift tax return on Form 709.6Internal Revenue Service. Gifts and Inheritances The clean fix is to match deed percentages to actual financial contributions.
1031 Exchanges
Tenancy in common interests in investment real estate can qualify for tax-deferred exchanges under Section 1031, but the IRS imposes strict conditions. Under Revenue Procedure 2002-22, the arrangement can have no more than 35 co-owners, each must hold title individually as a tenant in common, the group cannot file a partnership return or operate under a common business name, every sale, lease, and management decision requires unanimous approval, and revenue and costs must be shared in exact proportion to ownership percentages.7Internal Revenue Service. Revenue Procedure 2002-22 Breaking any of these can cause the IRS to reclassify the arrangement as a partnership and disqualify the exchange.
Ending the Arrangement Through Partition
When co-owners deadlock, any tenant in common can file a partition action to force a resolution. A.R.S. § 12-1211 lets any owner compel partition by filing a complaint in the Superior Court for the county where the property sits.8Arizona Legislature. Arizona Code 12-1211 – Compelling Partition; Complaint The complaint has to identify all owners, describe the property, estimate its value, and state each party’s share.
Courts prefer partition in kind, meaning a physical division of the land into separate parcels, which only works for large rural or vacant tracts. For a house or developed lot, physical division is almost never practical. When the court finds that dividing the property would cause “manifest prejudice” to the owners, it orders a sale and divides the proceeds by percentage after deducting partition and sale costs.9Arizona Legislature. Arizona Revised Statutes Title 12 Courts and Civil Proceedings 12-1218 – Report of Commissioners When Property Incapable of Fair Division; Sale; Distribution of Proceeds
Legal fees for a straightforward partition typically run $10,000 to $30,000, with complex cases costing more. A court-ordered sale almost always brings less than a voluntary listing, because buyers discount for uncertainty and speed. Both sides lose money compared to negotiating a buyout.
Extra Protection for Inherited Property
Arizona adopted the Uniform Partition of Heirs Property Act at A.R.S. §§ 12-3401 through 12-3412. If the court finds the property qualifies as heirs property, a co-tenant who did not request the sale gets a right to buy out the interests of those who did, based on a court-ordered appraisal. The court must also weigh factors like the length of family ownership, sentimental or ancestral value, current lawful use, and whether a physical division would materially reduce the aggregate value of the resulting parcels. The Act raises the bar a selling co-tenant has to clear before a court orders a sale.
Why a Written Co-Tenancy Agreement Matters
Arizona law gives you a skeleton. It says who owns what and how to get out, but says almost nothing about the day-to-day friction that causes these arrangements to collapse. A written co-tenancy agreement fills those gaps, and skipping it is the single most common mistake co-owners make.
At minimum, the agreement should cover:
- Expense allocation: who pays what, how fast, and what happens if someone misses a payment.
- Use restrictions: whether the property can be rented, used as a primary residence, or used commercially.
- Right of first refusal, giving existing co-owners a chance to buy a departing owner’s share before it goes to an outsider.
- Buyout triggers for events like death, divorce, bankruptcy, or disability, with an agreed price or formula.
- Dispute resolution: whether disagreements go to mediation, arbitration, or court, and who pays the costs.
- Improvement approvals: a process for proposing, approving, and splitting the cost of upgrades beyond basic maintenance.
Without these terms in writing, every disagreement defaults to the blunt tools of contribution claims and partition actions. Both cost thousands and tend to end relationships that started with good intentions.