How to Hold Title
Choosing How to Hold Title to Your New Home
As an introduction, here are the common ways to hold title:
- Tenants in common
A tenancy in common arises where two or more owners hold title to property, each having a right of possession and each owning an undivided interest in the property. When two or more co-owners take title to real estate, especially if they are not married to each other, they often become tenants in common.
Each tenant in common owns a specified interest in the property. It need not be equal. For example, one owner might own a 50% interest, another could own a 10% interest and a third tenant in common could own a 40% share. The percentage ownership is specified on the deed.
An advantage is that each tenant in common can sell or pass his interest by his will to whomever he or she wishes without the other tenant(s) selling its interest. Tenancy in common property is subject to probate court costs and delays, however.
- Joint tenancy with right of survivorship
When title is held in joint tenancy with right of survivorship, all co-owners must take title at the same time; they own equal shares and the surviving co-owner winds up owning the entire property. Upon the death of one of the co-owners, his or her joint interest in the real property will pass automatically, by operation of law, to the surviving co-owner.
An advantage is that probate costs and delays are avoided when a joint tenant dies. The surviving joint tenant(s) usually needs only record an affidavit of survivorship and a certified copy of the death certificate to clear the title.
- Living trust
Homes and other real property can also be held by a revocable living trust entity. Until the death or disability of the trust creator, the home and other real estate in the living trust are treated normally. If the trustor becomes incompetent, the named alternate trustor (such as a spouse or adult child) takes over management of the trust assets. When the trustor dies, the assets are distributed according to the trust's terms.
Privacy is an advantage. Unlike a will, which becomes part of the public probate file, the living trust terms remain private. Other advantages include avoidance of probate costs and delays.
For additional information, please contact your title company and officer and/or a real estate attorney.
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