Types of Property Ownership

As a Burlington real estate agent (and surrounding areas), I often get questions regarding multiple people buying a home together and the different types of property ownership. Buying a new property is an exciting time and as a buyer and it’s important that you understand the different types of home ownership. In today’s blog, I will discuss the two main types of co-ownership when you are buying/investing with one or more persons. This will help you avoid potential legal disputes in the future when it comes to who owns what!

What is Joint Tenancy?

Joint tenancy is the perfect type of ownership for individuals who are related, married, common-law, in long-term relationships, etc. With this type of ownership, individuals hold an undivided interest in the property. They are considered to be equal partners and have the right of survivorship, which ensures the transfer of ownership to the remaining owner(s) in the case of a death. Meaning, the property will be transferred automatically to any surviving owners, relieving them of the burden of probate.

These four requirements must be met in order for Joint Tenancy to be valid:

1. Interest: The owners must have identical (equal) interest in the property including nature, extent and duration.
2. Title: All co-owners must have equal title ownership and created at the same time.
3. Term: All co-owning parties must enter the agreement at the same time.
4. Possession: All parties will have the same decision-making power.

What is Tenants in Common?

This type of home ownership is perfect for co-owners who own different interest amounts in a property; making this a great option for friends, investors and family. The division of the property does not have to be equal but it is clearly defined for each party. There is no right of survivorship which means in the event of a death, owners may leave their percentage to another individual that is not part of the agreement. This type of arrangement is more likely to go through probate than Joint Tenancy.

If you’re still deciding what type of ownership best suits your situation, check out these additional factors regarding ownership:

What is Division of Equity? When the ownership portions are not an equal division, it is crucial to outline the division of partnership and financial expectations. It’s incredibly important to have an agreement in place to prevent issues with your co-owners down the line.

What is an Agreement? This is a legally crafted, paper copy created by a professional to protect all owners involved and their ownership.

What is the Right of Survivorship? The right of survivorship determines who will inherit the property after the death of a co-owner. If you choose your spouse or a close family member to inherit the property without going through probate, then Joint Tenancy is the better option. However, if you change your mind in the future, it is possible to sever this arrangement.

How to severe Joint Tenancy? To end Joint Tenancy, one of three things can occur:

1. Consent – There is written consent by all parties to dissolve the arrangement
2. Conduct – If the arrangement lacks equal justice, the agreement can be altered to Tenants in Common
3. Transfer – A portion of one of the owners can be transferred to someone else

What is Probate? It is the legal process that ensures a Will must be validated by the courts before any transfer or change on the title can occur.

I hope this information has prepared you for any upcoming purchases that you plan on making with more than one owner. If you have any further questions, please feel free to reach out to me or your preferred real estate lawyer!

Legal Information provided by:
Zachary Soccio-Marandola
Real Estate Lawyer
socciomarandola.com