A few things that don’t get discussed nearly enough at settlement are, what do I do if I can’t pay my mortgage one month and how should I (we) take title? Today, I am going to talk about the options for title and the legal forms of ownership. There are three ways an owner(s) can take title or own the home:
1. Tenants in Common
2. Tenants by Entirety (right of survivorship)
3. Joint Tenancy
Tenants in Common: Each owner owns the property in unity. It is the ownership interest, not the property, which is divided. Each tenant has an undivided fractional interest in the property. A tenant in common can hold one-half or one-third interest in title. Each owner can sell, convey, mortgage or transfer his/her interest without the consent of the other co-owner. When one co-owner dies, that owner’s interest passes to their heirs as defined by state law or to a devisee (person named in a will) but it does not pass to another tenant in common unless that co-owner is an heir, devisee or purchaser.
Tenants by Entirety: This is a special form between husband and wife recognized in Pennsylvania. Each spouse has an equal and undivided interest in the property. This tenancy by entirety must be created by deed or will. Each share in ownership, transfer of title and incur indebtedness against the property as a unit. One spouse cannot encumber or convey their half interest. Rights of survivorship means that when one spouse dies, the surviving spouse automatically becomes the severalty or sole owner.
The only way one spouse can terminate tenancy by the entirety is by:
* agreement between both parties (through new deed)
* court order
Joint Tenancy: Two or more people can hold title as joint tenants and can only be established by an intentional act of conveying a deed or by a will. Each party must be explicitly identified as joint tenants. It can’t be implied or created by operation of law. Death of one of the joint tenants does not destroy the unit. The surviving joint tenant(s) acquire(s) the interest of the deceased tenant. This will occur by the right of survivorship.
It is extremely important to know the positives and negatives that go along with each of these forms of ownership. Each person’s needs are different so knowing the different traits of each form of ownership will help to serve those needs. If you are a business and purchasing a property, tenancy by the entirety is probably not the way to go.
Talk to your real estate agent or title clerk to find out more about these forms of ownership before you sign those documents.
Renée Porsia is an Associate Broker with Prudential Fox and Roach and published author. Renée Porsia services The Main Line, Philadelphia, Bucks, Montgomery Counties and New Jersey. If you are thinking of listing your home on The Main Line, Philadelphia, Bucks or Montgomery Counties or in New Jersey, Renée can be reached at 215-669-0589, @ email@example.com. or check Renée Porsia out on the web at http://www.reneeporsia.com
- Article on The Joint Tenancy Paradox (lawprofessors.typepad.com)
- Article on Tenancy-by-The-Entireties Interests and the Federal Tax Lien (lawprofessors.typepad.com)
- Nine ways property can be legally transferred at death (babyboomerretirementincome.wordpress.com)