Property Ownership Options
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Holding title is proof of home ownership.
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A buyer in a real estate transaction must select the form of ownership he will assume for the property being acquired. There are numerous types of title options available. Two of the most common types are sole ownership and co-ownership, within which several variations exist. How a person decides to hold title is an important decision that impacts legal rights and tax obligations. The associated rights and obligations of each form of ownership may vary by state. It is recommended that an attorney and/or accountant be consulted when making a decision on title.
Sole ownership
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Sole ownership allows title to be held by one individual only.
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Sole ownership is a common form of property ownership. This is when title is held by, or vested in, one individual. This individual has the sole rights and discretion to the ownership and transfer of ownership. Sole ownership may be held by an unmarried man or woman. For example, a single or legally divorced individual. A married man or woman may opt for sole ownership, but this may require the spouse to consent and relinquish rights through the use of a quit claim deed or other written documentation.
Tenancy in common
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Tenancy in common owners may sell, share or give away their interest in the property.
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Co-ownership allows a single property to be held by, or vested in, two or more individuals. Tenancy in common is one of various forms of co-ownership. In this case, interests in the property may be either equal or unequal. However, despite the fractional interest in the ownership, each owner has the right to enjoy the entire property (undivided). Upon the death of one of the co-owners, that owner's interest passes to his heirs rather than to the remaining co-owners, who have no survivorship right. Also, each owner has the right to sell, convey or transfer his interest without consent of the other co-owners.
Joint tenancy
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Joint tenancy requires "unity of ownership."
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Another co-ownership option which allows title to be held by two or more people is joint tenancy. A distinguishing feature of joint tenancy is "unity of ownership." First, there must be unity of title and time. This means all joint tenants must acquire their interest in the property at the same time and by the same document. Also, owners must have equal ownership interests and undivided right to possession of the property. Joint tenancy includes the right of survivorship; thus, a co-owner's interest in the property ends upon death and automatically transfers to the remaining (surviving) co-owners. Interest will not transfer to the deceased owner's heirs. The final survivor of a joint tenancy unit takes sole ownership of the property.
Tenancy by the entirety
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Tenancy by the entirety may be held only by husband and wife.
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Some states offer tenancy by the entirety, a special form of co-ownership for a husband and wife. Both husband and wife have an equal, undivided interest and rights of survivorship. Title may only be conveyed during their lifetime when a deed is signed by both the husband and wife. A surviving spouse becomes sole owner upon the death of the other. In the case of a divorce, the tenancy by the entirety may be terminated, resulting in title held as tenants in common.
Community property
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A few states offer the option of community property as another way for a husband and wife to hold title. It may be applied to all property acquired by either spouse during the course of the marriage. Conveyance of the property will require the signature of both the husband and wife. However, upon death of one spouse, the other automatically owns one-half of the property but the other half will be transferred according to the will of the deceased spouse.
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