Can you imagine a world in which a person could claim ownership of property by word of mouth? It would create a game of musical chairs. Not to mention that real property, whether it is your principal residence, a rental property, a second home, or vacant land, is usually your greatest and most valuable investment. As the owner of such an investment, you deserve a level of security commensurate with your financial sacrifice in purchasing the property.
Probably the only axiom in real estate that is more important than “location, location, location” is that a real property transaction must be in writing. Therefore, a universal truth in contract law is that ownership or transfer of ownership of real property must be evidenced in writing through a deed or a title (or both). While most may not think of a deed or a title as a contract, it most certainly is. Deeds and titles bind two or more parties to a mutually agreed upon arrangement.
How to Hold
There are several ways in which to hold property, and each has different implications. The methods by which owners hold property is often not mentioned on the deed or title itself, but created. For example, property may be held according to how many people or entities are listed on the deed/title and/or the laws in the state in which the property is located. The simplest case is, obviously, when a sole person or business entity owns property.
There can also be multiple or joint owners of property, which presents a little more complexity. All tenants hold an individual, undivided interest in the property. This means that each party has the right to alienate, or transfer the ownership of, his or her interest. This transfer can be done by a deed, will, or other conveyance.
Take the case of two owners in which each owner has a 50 percent interest in the property. This concept is a legal fiction, as the property is most oftentimes not physically able to be split but instead the interest in the property is split. If, for example, the property was sold without a mortgage debt or other liens, each owner would theoretically be entitled to 50 percent of the selling price.
Take Your Pick
The most common ways to hold title to property are: (1) tenancy by the entirety, (2) tenancy-in-common and (3) joint tenancy. In these respects, the term “tenant” is not used to describe the lessee of real property. Rather, it is used to describe two or more people that own the same property.
Tenancy by the entirety is created by a concurrent estate between two married people or, in other words, a married couple whose names are both listed on the deed to the property. In a tenancy by the entirety, neither tenant (spouse) has the right of alienation (ex. sell or transfer his or her ownership interest) without the consent of the other. In a tenancy by the entirety, if one spouse survives the other, the surviving spouse receives the deceased spouse’s interest and acquires full ownership of, and 100 percent interest in, the property. A transfer under these circumstances is called a “right of survivorship.”
In the case of joint tenants, there are also two or more owners of a property, but these owners are not necessarily married. With a joint tenancy, there can still be a right of survivorship, so long as it is stated in the deed. One key difference is that a joint tenant may alienate his or her property without the consent of the other owner(s). If that occurs, the law treats this new arrangement as a tenancy-in-common and the right of survivorship is dissolved. Regardless of a joint tenancy or tenancy by the entirety, each party owns his or her equal share, or has an equal and undivided interest in the property.
A tenancy-in-common is another legal form of co-ownership in which the tenants may hold unequal interests and may also acquire their interests from different instruments and at different times. Joint tenants and tenants by entirety must obtain their interests within the same document and at the same time.
To protect your interest (pun intended) in real property, it is best to have a competent professional assist you with the conveyance. Here at The Probate Pro, we have several attorneys who specialize in such transfers and are trained and experienced in handling matters related to the legal acquisition and transfer of real estate.
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Contact us today at Info@TheProbatePro.com or 248.399.3300 to discuss and discover the best plan for your individual needs.