One of the last things home buyers might think about is how to hold title to their new house. Yet, for most homebuyers, different options do exist, and those options determine your share in the property and what happens to it after your death. Your title company or attorney can advise you of the best way to hold title to suit your individual circumstances. The title company or closer will record your decision on the title deed.
If you are buying a home by yourself, you probably will hold title in your name alone. Sole ownership gives you the exclusive right to live in, mortgage, rent and sell the property. When you die, your property will pass to the heir you nominate in your will or, if you don't leave a will, according to state rules. One half of a married couple can also take sole ownership title. However, this may require that the non-owner spouse sign a quitclaim deed giving up any ownership rights.
Joint Tenancy With a Right of Survivorship
When two or more people buy property together, they can hold title as joint tenants with a right of survivorship. In this arrangement, the co-owners own the property equally and have equal rights to live in the home or receive income from it. After a joint tenant dies, the property passes to the survivors. This happens automatically, and the deceased's will does not change the position. Thus, the last surviving joint tenant will wind up owning the property outright.
Tenants in Common
Tenancy in common is frequently used when two or more people buy property together, but the co-owners are not married. Unlike joint tenants, tenants in common may own the home in unequal shares. So, one co-owner might own 40 percent of the property; the other holds 60 percent. When one tenant in common dies, his share passes by his will to whomever he wishes. The drawback is that the surviving tenant in common may end up owning the home with a stranger.
Husbands and wives who own property in California, Nevada, Wisconsin, Arizona, Louisiana, Texas, Idaho, New Mexico and Washington may hold title as community property. Community property is a hybrid joint tenancy-tenancy in common arrangement. Each spouse owns half the property, which he or she can transfer by will to the surviving spouse or to someone else. You can also own community property with a right of survivorship, which means it automatically passes at death to the surviving spouse.
Jayne Thompson earned an LLB in Law and Business Administration from the University of Birmingham and an LLM in International Law from the University of East London. She practiced in various “big law” firms before launching a career as a commercial writer. Her work has appeared on numerous financial blogs including Wealth Soup and Synchrony. Find her at www.whiterosecopywriting.com.