Real Estate Basics – Ways to Take Title

Posted by admin on May 10, 2010 under Real Estate License Basics | Be the First to Comment

In this installation of our real estate basics series we will examine the many ways that there are to hold title to a property. The title to a property is the legal document showing the ownership, and depending on the situation, there are a number of different ways to hold title. The way that title is held will have tax ramifications and will be important is the transfer of title in the event of a titleholders death.  In order to successfully earn your real estate license in any state, you will need a clear understanding of each of the ways you can take title to real estate.

For a single person to take title to a property, they are taking title in severalty. Severalty comes from the word sever, meaning to cut off, as in cutting off anyone else’s ownership interests in the property. Estate in severalty or sole and separate ownership of a property can be held by one person only. When more than one person is to have co-ownership interest in the property this is known as concurrent estate. The three most widely used ways to hold title with two or more people are tenancy in common, joint tenancy and tenancy in the entireties.

Tenants in common hold individual interest in the group ownership of a property. The interest may be divided equally between the listed owners, or some owners may have a larger ownership share of the property than others. Any owner can sell their interest in the property to whomever they so choose without the permission of any of the other owners. Tenancy in common is an inheritable estate, meaning that should an owner die, the ownership rights transfer to the heirs of the owner and not to the remaining owners

Joint tenancy with the right of survivorship differs because owners must hold equal interest and should one owner die the ownership rights pass to the remaining owners and not the heirs. Joint tenancy can be granted by deed or by will and each of the joint tenants must be named specifically on the documents. In order for a joint tenancy to be considered valid it must have the four unities of possession, interest, time, and title. The unity of possession means that the joint tenants must have undivided interest in the entire property. Interest refers to the equal ownership interest in the property. Time means that all of the owners must take title at the same time, and title meaning that a transfer of title must occur. If any of the four unities are broken then the joint tenancy is dissolved.

Tenancy in the entirety is a joint tenancy for married individuals. Tenants must be husband and wife and each holds equal interest. This form of title also has the right of survivorship and is an inheritable estate. Tenancy in the entirety can be terminated by foreclosure, mutual agreement, death or divorce. This type of title has no right of partition, meaning that on spouse may not sell without the other.

Once you have earned your real estate license you will want to have all of this information available should your client’s have general questions on what each type of title is, but you would want to have them consult with their attorney to make any decisions of how to best take title.