When you purchase a real property such as a piece of land or a house, the title of ownership must be transferred to your name. The concept of the real estate ownership is a bit complicated compared to purchasing other properties. It can take several forms and each type has its own rules regarding the ownership transfer, finance, and improvements.
The title ownership of real estate can be divided into three categories – sole ownership, joint ownership, and title by contract. Get a gist of what each type means to avoid unforeseen complications.
It refers to a property’s right of possession to only one person. The ownership will be transferred by the laws of intestate succession or through transfer documents. If the owner dies, his or her next of kin will get the property after going through probate.
The benefits of such title possession are the ease of transactions and no capital gain upon selling the property.
Joint proprietary rights refer to the condition when two or more people own a real estate together. It can be of several types:
a. Joint Tenancy with Right of Survivorship (JTROS)
Such freehold means that there will be more than one owner of a property and all of them will enjoy the equal rights. One can withdraw from the joint funds without the permission of others but all the parties have to be on the same page when it’s time to sell or mortgage. Upon the death of one owner, the proprietorship will be transferred automatically to the surviving owners.
b. Tenancy by the Entirety
Available in some states, this type of ownership can be shared by only a married couple. Other rules are similar to JTROS regarding withdrawing funds, securing a mortgage, and transfer of the ownership upon the death of one owner.
c. Community Property
Recognized in only some states, this joint ownership can exist only for a married couple. There are particular state laws determining ownership rights of each spouse. However, the money earned by one or both spouses during the marriage and they will have equal ownership to all the properties purchased with the earnings. Similarly, the debts during this time will be both of their responsibilities.
d. Tenancy in Common
It is a shared tenancy in which each holder is the owner of a specific percentage of the property that is separately transferable. It means that an owner can owner can withdraw funds, sell, or mortgage his or her share of the property. Also, a deceased owner’s share of the property will be transferred to his or her beneficiaries, not to the surviving owners.
Tenancy by Contract
The property owner will have the full rights to his or her property during their lifetime. After their death, it will pass to their chosen beneficiaries. The successor does not need anything except for a death certificate to claim the proprietary rights.