When buying or selling real estate, it’s essential to understand what ownership rights are transferred at the time of sale. Ownership of real property takes a number of forms, each with its own set of rules and expectations; by developing a clear understanding of the terminology used to describe various types of ownership, buyers and sellers can ensure that their real estate transactions run smoothly and according to plan.
Sole Ownership
The simplest form of property ownership, sole ownership grants one individual complete rights over the property in question. This is the form used when a single person purchases a home or piece of real estate.
Tenancy by the Entireties
When a married couple purchases real estate together, they are granted tenancy by the entireties by many states. This means that each party holds one-half interest in the property, but neither can dispose of or otherwise abridge the right of the other to the property. For instance, a second mortgage or lien against the property would require the consent and signature of both members of the couple; this prevents either individual from disposing of the property against the wishes of the other.
Tenancy in Common
This form of ownership allows multiple people to own a percentage of the same property. While the percentage owned may vary, each person has an equal right to the property during their lifetime; for instance, in most cases someone who owned 50% of a home could not legally prevent the 25% owners from residing in the home as well. If one of the tenants in common dies, their interest in the property passes to their heirs; it does not devolve to the other tenants in common. Thus, these arrangements can last for several generations.
Joint Tenancy
Joint tenancy agreements require that four conditions be met: ownership must be received at the same time, tenants must hold an equal interest, tenants must each be named on the title, and all must have exactly the same rights of possession. Unlike tenants in common, joint tenants have right of survivorship; the ownership of the property passes to the remaining joint tenants in the event of the death of one of the owners. One joint tenant can buy out another, or legal proceedings can be instituted to dissolve the joint tenancy. If one participant sells his or her interest in the property to another person, the joint tenancy is converted into a tenancy in common, and the right of survivorship is no longer valid; the other tenants have no recourse against this action by one or more of their number.
Community Property
In some states, real estate purchased by a married couple becomes community property. This form of ownership basically creates a condition where the real estate (and other property, if applicable) is owned by the partnership created by the marriage. If the marriage is dissolved through divorce, the value of the property must be divided between the partners. Community property ownership may give right of survivorship, essentially giving the entirety of the property to the surviving spouse in the event of death; other forms allow the partners to leave their interest in the property to their heirs after they die.
Joe Cline writes articles for Austin homes. Other articles written by the author related to Westlake Hills real estate and Austin Texas realtor can be found on the net.
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