To start off, listed below are the 5 ways to hold real property followed by an elaborated description of each.
- Joint Tenancy with Rights of Survivorship
- Tenancy in Common
- Tenants by Entirety
- Sole Ownership
- Community Property
Each method provided has its advantages and disadvantages, and is proven to be different for each individual family based on the situation.
Joint tenancy with Rights of Survivorship- when
two or more people hold title to real estate jointly, with the same amount of power and equality as long as they are alive. The rights would pass to the survivors in case of death.
- Advantages: One does not need to be married or related to the other owner(s)
- Disadvantages: Title to the property cannot be transferred if the property is sold without the consent of the other(s). In addition, if a creditor has a legal debt to collect from one of the owners, the lien will affect all the owners regardless if it is their fault or not.
Tenancy in Common- Individuals hold their title jointly, for
their part of the property. Example: one person can own 50% and two others own 25% of the property.
- Advantages: allows for each individual owner to decide how they would like to use their portion of the property
- Disadvantages: Once the property is sold, all liens must be paid off for a total transfer to take place.
Tenants by Entirety- Assumption that husband and wife are one person for legal purposes and shows that the property is owned by
one person (MUST BE MARRIED)
- Advantages: If one spouse dies, everything is transferred to the living spouse
- Disadvantages: If a divorce occurs, the title is automatically converted to “Tenancy in Common:, each person having the option of doing what they please with the section of property they own
Sole ownership- When one person, firm, or company owns a property. In some cases a married person may want to have a sole ownership which will have to be acknowledged by the spouse depending on the laws of your state.
- Advantages: No other owner needs to be consulted
- Disadvantages: Transfer of property would have to be settled in court if the sole owner dies.
Community Property: Any income and any real or personal property acquired by either spouse during a marriage are considered community
property, and thus, belong to both partners of the marriage (depends on the state)
Advantages: Tends to help spouses if they are financially unstable. It also promotes the equal generation of ideas in terms of financial, legal matters, and oneness in communication
Disadvantages: Needs consent of other spouse for any transactions. If one is irresponsible, it affects the other spouse as well. This process is a lot more complicated than the others listed above.
