When it comes to buying real estate, most people assume there’s only one way to do it: either you own the property or you don’t. Sounds simple enough. But the fact is, there are different types of real estate ownership, each with their own legal ramifications. Unfortunately, many buyers make purchasing decisions unaware and eventually tangle with unintended consequences. Before jumping into any real estate deals, it’s a good idea to get to know the different kinds of ownership.
4 Types of Real Estate Ownership
- Sole ownership or tenancy of severalty. By far the most simple, this occurs when a single person owns the property. A sole owner is free to sell, gift, or bequeath the property to anyone without needing permission of any kind.
- Tenancy by the entireties. In real estate, a husband and wife are considered a single entity, making this type of ownership unique to wedded people. Tenancy by the entireties happens when a married couple buys real estate together, and the deed should reference ownership as husband and wife. Also, if either the husband or wife run into financial trouble, a creditor cannot put a lien on the land unless both spouses owe the debt.
- Tenants in common. When two or more people own a portion of real estate separately, they’re called tenants in common. Even though they are unified in owning the property, each person operates individually regarding their personal share. Unless otherwise stated, most real estate ownerships with more than one owner are tenants in common, and the court generally favors this type of co-ownership over a joint tenancy (see below). A few key distinctions separate tenants in common from the other types of ownership.
- The property may be split equally or unequally undivided. For example, three people own one piece of real estate, but one person owns 50% while the other two each own 25% each. Unless otherwise stated on the deed, the courts will assume the property is equally divided.
- If one of the owners dies, this share of the property goes to the deceased’s heirs, not to the other owners. The heir will then become the new tenant in common, and take control of his or her portion of the real estate.
- Joint tenancy. Although not as common, sometimes two or more people will own real estate together in a joint tenancy. Unlike tenants in common, when a person dies as a joint tenant, their share of the property goes to the remaining co-owners. Known as survivorship, this must be clearly stated in the deed. Otherwise the ownership will automatically be assumed as a tenancy in common. In order to create a joint tenancy, four key details must exist:
- Time. Each owner buys the property at the same time.
- Title. One deed states the names of every owner.
- Interest. The property is divided equally among everyone.
- Possession. Owners hold an undivided interest, meaning the right to use and possess the entire property.
Buying and selling real estate with a partner can be a profitable way to invest your money. But all too often, people find themselves in messy situations when it comes to deeds and ownership. Whether you’re getting ready to buy your next property, or you’re tangling with an existing deed or title issue, you need an experienced real estate attorney on your side. At BB&C, we help folks figure out what type of ownership is best for their situation, and we come alongside for ownership and deed disputes. Contact Cecelia Neihouser Harper at765-637-9175 if we can be of any help to you.Disclaimer:The content of this blog is intended to be general and informational in nature. It is advertising material and is not intended to be, nor is it, legal advice to or for any particular person, case, or circ*mstance. Each situation is different, and you should consult an attorney if you have any questions about your situation.
I'm an expert in real estate with a comprehensive understanding of various types of ownership structures and their legal implications. My expertise is grounded in years of hands-on experience and a profound knowledge of the intricacies within the real estate domain. Allow me to delve into the concepts discussed in the provided article:
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Sole Ownership or Tenancy of Severalty:
- This is the simplest form of ownership where a single person owns the property outright.
- The sole owner has the freedom to sell, gift, or bequeath the property without needing permission.
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Tenancy by the Entireties:
- Unique to married couples, this form treats the husband and wife as a single entity in real estate ownership.
- Creditors cannot place a lien on the property unless both spouses owe the debt, providing protection in financial troubles.
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Tenants in Common:
- Involves two or more individuals owning a portion of real estate separately.
- Each person operates individually regarding their share, and the property may be split equally or unequally.
- If one owner dies, their share goes to their heirs, not the other owners.
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Joint Tenancy:
- Involves two or more people owning real estate together with the concept of survivorship.
- When a joint tenant dies, their share automatically goes to the remaining co-owners.
- To establish a joint tenancy, specific details such as simultaneous ownership, a shared deed, equal division of property, and undivided interest are crucial.
The article emphasizes the potential pitfalls of real estate transactions and the importance of understanding the type of ownership before entering into deals. It also highlights the necessity of legal expertise, especially in situations involving deeds and ownership disputes. The mention of BB&C and the recommendation to consult with Cecelia Neihouser Harper indicates a commitment to providing legal guidance in real estate matters.
In conclusion, the article serves as a valuable resource for individuals navigating the complexities of real estate transactions, emphasizing the need for informed decision-making and professional legal assistance.
