Hawaii Pre-Licensing National Practice Exam

In a tenants in common agreement, if one owner dies, how is the property distributed?

1. The property is sold and divided evenly

2. It is divided, with the surviving owner's interest remaining intact

3. The entire property goes to the state

4. It is divided, with the surviving party retaining their original interest

The correct answer is: It is divided, with the surviving party retaining their original interest

In a tenants in common agreement, when one owner passes away, that owner's share of the property does not automatically transfer to the remaining co-owners but rather becomes a part of their estate. The survivor retains their original interest in the property, and the deceased co-owner’s share is distributed according to their will or the state’s laws of intestacy if there is no will. This means the surviving co-owner still maintains their percentage of ownership, and the deceased’s interest can be passed on to their heirs or beneficiaries, depending on the circumstances. This structure is distinct from joint tenancy, where the right of survivorship ensures that the remaining owners automatically inherit the deceased's share. In a tenants in common arrangement, the continuity of ownership and the flexibility in managing each party's share is preserved, allowing heirs to inherit without disrupting the ownership structure among the surviving co-owners.