Not all forms of ownership of real property offer the same rights and obligations to the owners of the property. The type of ownership of real property determines how the property is titled, the rights each owner has in the property, and how ownership in the property can be terminated. There are three different types of real property ownership: tenants in common; joint tenants with rights of survivorship; or tenants by the entirety.
When property is held as tenants in common, each individual has a divided interest in the property. Each party has the right to sell, transfer, or encumber their interest in the property, irrespective of the other owners. If four individuals owned a property as tenants in common, each individual would own twenty-five percent of the property, and each individual could sell and transfer their twenty-five percent interest as they see fit. If one of the owners passed away, only their twenty-five percent interest would be inherited by their heirs. If each owner left their one-fourth interest to two family members, the property would be owned by eight individuals. This form of ownership can accumulate several owners as the property passes from generation to generation.
When a property is owned as joint tenants with rights of survivorship, each individual owns one hundred percent of the property. It is a concurrent method of ownership. Each owner has the same right to possess the entirety of the property. When one owner passes away, that owner’s interest in the property will pass to the surviving owner automatically. If the parties disagree about how to divide their interest in the land, one of the owners can file with the Court to partition, or divide, the property.
Tenants by the entireties occurs when the owners of the property are married. The spouses, as a marital unit, own the interest in the property. The only way to sever ownership of tenants by the entireties is through the consent of both parties or a dissolution proceeding. The property cannot be sold or disposed of without the consent of the other owner. When a dissolution proceeding is initiated, the divorce court has jurisdiction to determine ownership of the real estate. The divorce court can order the house to be sold, or order that one person sign a deed transferring the property to the other.
Individuals may not realize the differences between the types of ownership when they are titling real property. This can have serious implications on their interest in the property. Individuals should consult with an attorney prior to deciding how to title their real estate.
If you have questions about the different types of ownership of real property, contact the experienced attorneys at Slotegraaf Niehoff, P.C.