Here’s the scenario
You’re planning to buy a property with your spouse, finance, friend or a family member. You’ve pooled funds and figured out who’s contributing what, you’ve determined how much you’d like to spend, chosen a neighborhood and maybe even a home.
Are you aware of the different types of joint ownership? If a single person is purchasing a home, then they would be a sole owner.
SOLE OWNER – One that holds possession to real property with no one else, and undeniably the most risk-free form of ownership.
When two or more individuals are purchasing real property together there are multiple options available for holding title: Tenants in Common, Joint Tenants, and Tenants by Entirety are the three most common types of holding title.
But what do each of these terms mean?
How will you choose the best option for you and all involved?
Unfortunately, this conversation is not had by many before deciding to buy a home. It’s crucial that you know your options because how you choose could have ramifications in the future especially in the event of one’s death.
Most buyers aren’t made aware of this until after they’ve put a house under contract and are asked by the title company or even worse at the closing table. As your agent, I would never give legal advice and cannot tell which type of ownership is best for you. And I will share with you the different kinds of joint ownership available to you so you can make an informed decision.
JOINT TENANCY is where two or more people purchase property together and each owns equal shares and have the same rights and obligations. If one of the owners dies, the shares will be passed to the remaining co-owners (joint tenants). Due to the right of survivorship the shares can’t be inherited by the deceased next of kin.
TENANCY BY ENTIRETY is a particular form of joint tenancy for married couples exclusively. Tenancy by the entirety is similar to a joint tenancy with the right of survivorship and neither spouse can sever the tenancy by the entirety by selling their interest in the property.
Ownership between multiple parties where they each hold an individual, undivided ownership interest is TENANCY in COMMON. Tenants in common own distinct shares in the property. For example, two owners may own 25% each with a third holding 50%. Owners can take title at separate times, and they can sell or give away their shares as they see fit. There is no right of survivorship so shares can be inherited by the deceased party’s heirs.
Property law varies from state to state – this is very important to remember for buyers relocating to Northern Virginia from another state. Give Abraham a call at 703-539-2053 or email info@AskAWalker.com if you’ve got questions about the homebuying process.
NOTE: For legal advice on title issues contact your Real Estate Attorney.
Buying a Home with Friends by Debbie Drummond
First Time Home Buyer by Eileen Anderson
Buying a House Before Marriage by Bill Gassett
What Buyers Wish They Knew Before Buying by Lynn Pineda