Frequently Asked Questions: Real Estate Law
What are some of the different forms of ownership of real estate?
An individual can own real estate in his or her individual name, and two or more individuals (subject to a special category for spouses which is addressed later on) can hold title either as joint tenants or as tenants in common. A tenancy in common affords each owner an undivided percentage interest in the real estate, as described in the deed pursuant to which title is acquired. For instance, if three individuals own property as tenants in common, and there is no percentage of ownership indicated in the grantee clause in the deed pursuant to which they acquired ownership to the property, then each such tenant in common holds a 1/3 undivided interest in the whole of the real estate. However, if the parties so elect, different percentages for each tenant in common can be set forth in the deed, such as for example, two of three tenants holding a 40% undivided interest in the property, and the remaining tenant in common holding a 20% undivided interest in the property.
There are no rights of survivorship with a tenancy in common, which means that upon the death of a tenant in common, his or her interest in the real estate does not pass to the surviving tenants in common, but rather passes either through the laws of intestacy to the heirs at law of the deceased tenant in common, or in accordance with his or her devise under his or her last Will, if the person dies leaving a duly executed Will which gets probated.
In the instance of a joint tenancy, each joint tenant acquires an undivided interest in the property as to his or her percentage interest. Similar to a tenancy in common, if three individuals own real estate as joint tenants, each owns an undivided 1/3 interest in the property. In the instance of a joint tenancy, and unlike a tenancy in common, upon the death of one of the joint tenants, the surviving joint tenant or tenants automatically take title to the deceased joint tenant's real estate. In this instance, the deceased joint tenant's interest in the real estate passes automatically to the surviving joint tenants, and does not pass in accordance with laws of intestacy nor in accordance with a devise under a Will.
Most husbands and wives take title to real estate in a form of ownership known as a tenancy by the entirety, which is a form of joint tenancy, with rights of survivorship to the surviving spouse; however, the tenancy by the entirety form of ownership also affords the married owners additional protection against the claims of certain creditors. For instance, if a husband and wife owned a piece of property as tenants by the entirety, and one of the spouses incurred debt which resulted in a lien being placed against the property (provided that debt was not incurred to provide necessities to the other spouse or the spouses' children), then upon the death of the debtor spouse, the lien is eliminated as to the non-debtor spouse by virtue of the automatic passage of title to the surviving spouse.
There are also other types of ownership of real estate, such as the corporate entity, a limited liability company, a partnership, or holding title in the name of a Trustee of a trust, or in the name of the trust, and all of these types of entities have their unique features and requirements. It is best to consult with legal counsel, at Coogan, Smith, prior to acquiring ownership to a parcel of real estate in order to determine the best means by which title should be held by the party or parties acquiring the real estate.