There are four methods of ownership in the world of real estate. Let’s take a look at the different methods of ownership and it may help you decide which best suits your circumstances.
The simplest is when just one person owns a property. This sole ownership is called “tenancy in severalty”, derived from the fact that the person’s interest is severed, or separate and apart from any other persons. The owner may mortgage, use or sell the property as he sees fit.
An ownership by a husband and wife is typically “tenancy by entirety”. When either one dies, the survivor automatically acquires the title to the property free and clear of any claims by heirs or creditors of the deceased. In this method of ownership, neither the husband or wife can alter the ownership rights of the other. In other words, one can not mortgage or sell the property without the consent and agreement of the other and no creditor can attach the real estate for the debt of just one of the spouses.
“Joint tenancy” is the third of the methods of ownership. Created by the intent of two or more parties, each co-owner is entitled to an undivided interest in the property to use, enjoy and possess. This form of ownership is noted for the right of survivorship, which allows that the rights and interests of a deceased co-owner passes to the surviving owners without the need of probate. To create a joint tenancy, the owners must have taken title at the same time by way of the same deed, must have equal shares, and be entitled to equal rights of possession.
“Tenancy in common” is created when two or more persons hold an estate but there is no right of survivorship. The share of an owner who dies passes to their heirs or parties named in their will. The owners can hold unequal shares (say 50%, 30%, 20%), but possession is undivided and equal. A party may sell or mortgage their proportional share without affecting the others ownership rights. The buyer would simply take over that proportional share and become part of the tenancy in common. A mortgage, though rare, would only create a lien on that proportion and would not bind the other owners.
If one of the last two methods of ownership I briefly described might fit your next real estate purchase, consult your attorney for solid advice and planning.