If you are buying a home with another individual (or more than one), it’s important to understand the different ways to hold title to the property. Before closing/settlement, be sure to review how to hold title so that the title company or attorney will be able to title the ownership interests in the manner you desire.
One person holds title singly to the home regardless of marital or business partnership status. If married, the spouse of the property owner may have to sign a quitclaim deed that denies the non-owning spouse any rights to the home.
Joint Tenants (JT)
Most married buyers hold title to their homes as joint tenants. Both owners own equal shares. The ownership of the home goes to the surviving co-owner and does not go to the heirs of the deceased.
Tenants-in-common provides owners with more flexibility. Either owner can sell a share of the property without permission of the other owner. If the business partnership or romantic relationship ends, selling the property is much easier.
Many unmarried buyers take title as tenants-in-common. Tenants in common can also hold different amounts of interest in the property (60%â€“40%, 80%â€“20%, etc.). This arrangement is especially useful for real estate investors.
Titling as TIC, deceased owners can leave their share of the home to their children or other heirs instead of their spouse.
This form of title, available to spouses in some states, assumes the husband and wife are one person for legal purposes. It is similar to Joint Tenants with right of survivorship in that when one spouse dies, the deceasedâ€™s share automatically goes to the surviving spouse, even if the Will says otherwise. Simply put, with Tenants-By-The-Entirety neither spouse can transfer his/her half to someone else without the other spouse’s approval — something Joint Tenants with right of survivorship and Tenants-In-Common can both do.
Once a home is held in a trust, all property is handled the same as if it wasn’t in a trust until one of the property owners dies. The trust outlines how property is to be handled after death and in most cases—unlike wills—trust terms are never made public. Trusts are often very hard to challenge in court, also unlike wills.
Some states allow owners to hold title as community property. Wills must indicate upon an owner’s death if the home passes to the spouse or to someone else.
Before you buy your home, consult with financial and tax professionals, as well as a local real estate attorney, to learn the best way to hold title to your home.