RENT OWN SELL
Newyork
RENT OWN SELL
Newyork
Are you wondering how to buy land with multiple owners? You might be surprised to know that there is more than one way to own a real estate property together. Every option has its own nuances when it comes to buying and selling. State laws also dictate how concurrent ownership should be handled. Here is a general overview of joint property ownership.
Generally, There are Main Types of Property Ownership Scenarios Involving Multiple Owners:
1) Tenants in Common
2) Community Property
3) Joint Tenants
4) Tenants by the Entirety
The most popular form of concurrent property ownership is tenancy in common, also known as “TIC.” In joint ownership of a house under TIC, each tenant owns an equal share of the property, be it an apartment building, duplex, or another type of real estate property. TIC translates into each co-tenant having equal rights in the possession and use of the entire property. It also means that each co-tenant has equal rights to rent out the property. If the value of the property appreciates, each co-tenant will benefit from the increase in value.
In most states, the interests of co-tenants are considered undivided. That means that each co-tenant is a shareholder and has an equal right to the property.
Under a TIC arrangement, a co-tenant can transfer their share of the property to an heir or another buyer through will or deed. A co-tenant also has the right to mortgage their share in the property. What a co-tenant cannot do is they cannot sell or transfer the other co-tenants share in the property. Once someone transfers or sells their shares in a tenancy in common, the new owner steps into the shoes of the one who sold it and joins a tenant with the other co-tenants.
For example, owners X, Y, and Z are tenants in common. Owner X owns a 60% interest in the property, while Owners Y and Z each own a 20% interest. By law, they all have an equal right to use the entire property, but if they choose to sell or rent out the property, Owner X will receive 60% of the share while Owners Y and Z each get 20%.
In some states, married couples may have the co-ownership of the property as community property. These states are Texas, Arizona, California, Louisiana, Nevada, Idaho, New Mexico, Louisiana, Wisconsin, and Washington. In community property, states recognize couples as a single entity. In this type of ownership, couples do have the right to survivorship. The only difference is that you have to specify the right of survivorship to take over the title when one spouse dies. In community property, the right of survivorship is not automatically transferred to the co-owner.
Joint tenancy means that tenants will lose all interest in their property when they die. In a joint tenancy, the deceased person’s interests are automatically transferred to the other tenants. In other words, you can say that the last surviving joint tenant will own all the property in the end.
If you want to enter into a joint tenancy with someone, it may be a good idea to have your real estate agent or lawyer draft your will or the deed. Generally, the court prefers that property documents contain precise wording that illustrates the desire to create a joint tenancy relationship. In particular, the documents should explicitly state the intention of putting a right of survivorship arrangement in place and not a tenancy in common.
To maintain a joint tenancy, tenants must satisfy several complicated requirements related to the property such as title report, duration of agreement, possession, and interests for all joint tenants.
You may be wondering why anyone would want to create a joint tenancy. This ownership arrangement is mainly used by married couples who want to avoid the hassle of transferring their individual shares in a property. The joint tenancy provides them with the best solution in the event of either of their deaths because shares will automatically transfer from the deceased spouse to the surviving spouse without having to worry about court filings.
The point to understand here is that if all joint tenants die simultaneously, the property defaults to a tenancy in a common arrangement, and interests are divided up among heirs by the court. If there are two or more heirs, each will inherit property as tenants in common instead of as joint tenants.
Another way to have joint property ownership is through tenancy by the entirety. This ownership arrangement is only for married couples who want to have joint ownership of a house. The couple is supposed to meet all the requirements required to make a joint tenancy. One additional condition is that they must be married. If you are still an engaged couple set to marry in the future, you cannot buy a home as a tenant in its entirety. If the married couple who owns a property in tenants in entirety separates or divorces, they become tenants in common.
You might find similarities between a joint tenancy and tenancy by the entirety. If one co-tenant dies, that tenant’s interest is automatically transferred to the surviving tenant. In a tenancy by the entirety, one person cannot change the tenancy by transferring their share to another person.
Tenancy in its entirety is not valid in all states, but the exciting thing is that property acquired by a wife and husband automatically creates a tenancy in its entirety until and unless another type of joint property ownership is mentioned.
Before entering into any type of joint property ownership, you should check which real estate laws are recognized in your state. Additionally, be very careful about the wording when drafting the agreement or deed. It is best to solicit the help of a real estate attorney who knows the proper language and provisions to include in the document.
A unique feature of a joint tenancy and tenancy in common is that co-tenants may ask a court to partition the entire property. This is usually required when one co-tenant wants to sell their interest in the property. When you ask the court to partition joint tenancy and tenancy in common, the court divides the property into separately-owned and distinct sections. The court may also order a dividend through a “partition by sale,” and the sale proceeds are distributed to all shareholders.
Note: Remember that partitioning the property is not possible in a tenancy by the entirety.
You can establish co-ownership in a title and property deed. If you are financing your purchase, you may set co-ownership in your mortgage paperwork as well. If you are not a married couple and don’t specify it either indeed, the state will list the property as a tenancy in common by default.
Probate is a legal process conducted after someone dies where the assets of the estate are allocated and debts are paid. When there is survivorship right in ownership, the property transfer is bypassed as there’s nothing for the court to decide. The property is transferred to those listed in the deed.
Read Also: About Transferring Property Ownership
It largely depends on the type of ownership. If the owners are married people, only then will a tenancy in its entirety apply. On the other hand, all owners have to agree to sell a property under tenancy in common. Though, in joint ownership, an individual can independently sell their shares to exit the property ownership.
Having said all that, keep the Following in Mind:
If you’re thinking of purchasing property with someone, you should know what each joint property ownership option entails. Share this information with your real estate agent or a lawyer and seek their advice when drafting official ownership documents.
