Interests In Real Estate – What Are They?

If you have ever bought or sold a home, you received (from the seller) or provided (to the buyer) a deed that transfers the home. Sometimes the new owners take the property as “tenants in common.” Other times the new owners take the property as “joint tenants.” Other times the new owners take the property as “tenants by the entirety.” What do these terms mean? Here is a quick explanation:

Tenancy in Common: each owner (tenant) holds an undivided fractional interest in the property. For example, a tenant in common may hold 1/2 or 1/3 interest in a property. The physical property, however, is not divided into a specific half or a third. The co-owners are entitled to possession of the whole property. Because they own separate interests, they can sell, convey, mortgage, or transfer their individual interests without the consent of the other co-owners. However, no individual tenant may transfer the ownership of the entire property. When 1 co-owner dies, that co-owner’s undivided interest passes according to his will or living trust.

Joint Tenancy: Title is held as though all the owners, collectively, constitute 1 unit, i.e., unity of ownership. Upon the death of a joint tenant, the deceased’s interest transfers directly to the surviving joint tenants. Essentially, there is 1 less owner. The joint tenancy continues until only 1 owner remains. A joint tenancy can be created only by the intentional act of conveying a deed or giving the property by will. It cannot be implied or created by operation of law. The deed must specifically state the parties’ intention to create a joint tenancy, and the parties must be explicitly identified as joint tenants. Co-owners who wish to terminate their co-ownership may file an action in court called a partition suit. Partition is a legal way to dissolve the relationship when the parties do not voluntarily agree to its termination.

Tenancy by the Entirety: Husbands and wives can use this special form of co-ownership for their personal residence. In this form of ownership, each spouse has an equal, undivided interest in the property. During their lives, they can convey title to the property only by a deed signed by both parties. One party cannot create a 1/2 interest and generally they have no right to partition or divide. A lawsuit against 1 of the spouses will not result in a lien against the house. On the death of 1 spouse, the survivor automatically becomes the sole owner. To create a tenancy by the entirety, the deed must indicate that the property is to be owned “not as joint tenants or tenants in common, but as tenants by the entirety.”

For all your real estate needs, contact the experienced attorneys at Mag Mile Law either by email, [email protected] or by phone, 708-576-1624.

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