The Meaning of Ownership Interest in Real Estate

By: ROS Team

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If you are a first-time homebuyer, the real estate market might be a scary thing for you. There is so much to learn that you are likely to feel overwhelmed. Most buyers choose to bypass homeownership because of the unknowns and perceived complexities that come along with the buying process. But, as with most new ideas and concepts, gaining knowledge about owning a home before you’re actively in the market for one is a good first step. While doing your research, be sure to look into information on ownership interest in a property.

What Is Ownership Interest?

Ownership interest in property provides the owner with sole property rights. In other words, the owner can say what is and is not allowed on their property without having to confer with anyone else.

Ownership interest is an interest that gives you all those rights which are given to you after owning any property. These rights will depend on the type of interest you have.  For example, if you are sharing a tenant’s interest with someone, you cannot sell the property without first getting the other party’s permission.

What is Ownership Interest

What are the Types of Ownership Interest?

There are Five Main Types of Ownership Interest in Real Estate:

1) Tenancy in Common;
2) Sole Ownership;
3) Joint Tenancy;
4) Owning Partnership or LLC; and
5) Owning Corporation.

Let’s look at each of these more in-depth.

1- Tenancy in Common

In this type of ownership interest, the ownership of a property is split into at least two parts, and there is no single property owner. Rights are assigned to the property owners according to their proportion of ownership.

2- Sole Interest

With sole interest, there is only one owner of the property and he or she has all the rights to the property. In this scenario, the homeowner makes all the decisions concerning the property. He/she can modify the property without having to confer with anyone else. Moreover, he/she has the autonomy to sell the home whenever they want.

3- Joint Tenancy

As the name suggests, this type of ownership interest includes ownership between two persons, most commonly family members. Both owners share equal rights over the property, and they also share equal benefit that comes from the sale of the property. Compared to tenancy in common, joint tenancy only has two owners who have an equal share of the ownership interest and enjoy equal rights over the property. In contrast, tenancy in common can have more than two owners, and they can own different shares of the property.

One of the biggest differences between sole ownership and joint tenancy is that the joint tenancy requires the consent of both owners before a decision can be made about what will happen with a property.

4- Owning Partnership (LLC)

This type of ownership interest is usually used in commercial real estate. A limited liability company, or an LLC, allows investors to purchase and invest in the property under the owning interest umbrella. In this type of ownership interest, the investor’s liability is limited in the event of bankruptcy. There are few tax benefits in this type of interest that appeal to business owners, such as pass through taxation rights which allow people to avoid double taxation on the company’s revenue and expenses.  Instead, they are “passed through” to the owner’s tax return where they can factor into the owner’s overall income and losses.

5- Owning Corporation

Owning a corporation is similar to LLC with one key difference: multiple investors can buy a property and share co-ownership. In this type of ownership interest, the owner’s liability is not limited, so if the corporation is sued, the property could be sold off or seized to pay the debt.

What’s Required When You Have Ownership Interest?

As the owner, you’re responsible for paying all of the utilities and property taxes. You also are solely responsible for property maintenance and paying HOA fees.

ownership intrest

What are the Owner’s Rights When He/She Has Ownership Interest?

The property owner assumes several rights once they gain ownership of the property.  These include:

Procession to Home Right –

This simply states that the titleholder of the property is the legal owner of the property.

Right of Control –

This states that the titleholder or the person who is the owner of the property has a right to control the house/ property in any way he or she wants, but must still follow official rules and regulations. This includes rules set forth by HOAs.

Right of Exclusion –

This means the homeowner has the autonomy to decide and limit who can enter the property. There are some limitations to this right; for instance, the police must have a court-issued warrant in order to access someone’s private property.

Rule of Enjoyment –

This means the owner can perform any activities that he or she finds enjoyable as the sole owner of his property subject to certain official rules and regulations.

Right of Disposition –

The right of disposition states that the homeowner can sell his or her property whenever they want. But two things should be pointed out here: only when there is one single property owner the property can be sold, and the owner can sell the property only if he has complete ownership of the property and no longer owes a lender for any portion of the home’s cost.

Do I have an Ownership Interest in my House if I have a Mortgage?

When you purchase a property on mortgage, you agree to give the lender a security interest in your property. It means that the lender will have no ownership interest and cannot gain ownership in your real estate unless you violate your loan agreement, such as defaulting on the payment.

 Right of Disposition

How Do You Know if you have Ownership Interest?

You have an ownership interest if you own 1% or 100% of the property. You own the property solely if you are on the title, but they will have an ownership interest if others are on the house title.

Is Ownership Interest the same as Owning a Home?

When you purchase a real estate property, you are given an ownership interest in the property. It refers to your rights as the property owner, and you are allowed to use the property within certain boundaries.

What does Ownership of Property Mean?

Ownership is a state of exclusive rights for the use and control of the property. It could be an asset, intellectual property, a piece of land, or any object.

What are the 5 Types of Ownership?

The Most Common Types of Ownership are as Follows:

  • Sole Proprietorship
  • Joint tenancy
  • Corporation
  • Limited Liability Company (LLC)
  • Cooperative

How Do You Take Ownership of Property?

You may take ownership of the property through any ownership such as sole proprietorship, Joint tenancy, community property, or tenancy in common. In addition, there are other ways to take ownership, such as trustees of a trust or corporation.

Final Words

Having said all that, pinning down a concrete definition of ownership interest can be difficult and confusing. There is so much to learn and a multitude of different regulations to follow. The best way to get educated about ownership interest is to consult with a real estate professional in your area. They can give you accurate information based on your situation and location.

Related Articles:

Transferring of Property Ownership
Types of Home Ownership – Everything You Need To Know
Real Estate Fractional Ownership
Co-Ownership: How Does It Work?
Best Ways to Find Property Ownership Records