When you plan to buy a property, whether it's a house or a business office, there's a high probability that you don't give enough consideration on how the property ought to be titled. However, if you want to pass on the property to your spouse, children or other beneficiaries at a later date, the way you've titled the property has a significant role in how easily you may be able to pass it on. This article highlights various options for titling your property.
Sole ownership refers to ownership by a single individual or company capable of holding title. Single men and women, as well as married persons who hold individual property not entangled with their spouse, characterize common sole ownerships. With this type of ownership, transactions can easily be made since no other person needs to be consulted to sanction the transaction. To avoid legal issues pertaining to transfer of ownership upon death or incapacitation of the sole owner, a will comes in handy in detailing who will inherit the property.
Joint tenancy comes into effect when two or more persons hold title to a property, with equivalent rights to enjoy the real estate during their lives. If one of the partners dies, their rights of ownership are automatically passed on to the surviving tenant without the need to go through a probate process. Note that the parties in a joint tenancy need not be related or married.
Tenancy in common
This is where two or more parties own a property jointly, with equivalent rights to enjoy the real estate during their lives. In contrast to joint tenancy, the tenants in common hold title separately for their separate section of the property and can sell it at will. Moreover, ownership can be transferred to other parties through a will, and if one party dies, ownership will be transferred to that party's beneficiaries undivided. With tenancy in common, one owner can use the finances generated from their section of the property as collateral for monetary transactions.
Tenancy by entirety
This is ownership in property under the assumption that a husband and wife are one legal entity. This method gives property ownership to them as one entity, with title taken by the other in totality if one of them passes on. The main advantage of this type of title ownership is that no legal action can be initiated at the demise of one of the spouses. In other words, it provides for property protection for married persons which is not the case with joint tenancy.
In determining the best way to purchase and hold real estate titles, speak with a property lawyer to determine the pros and cons of each method.