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How You Can Title Your Home After Purchase
In the U.S. there are normally "5 ways" that you can title your home depending on what state you live in.
In the discussion that follows we will address each form of ownership type and give commentary on related topics that you should be particularly concerned with.
1) Sole Ownership
2) Tenancy by the Entirety
3) Joint Tenancy with the Right of Survivorship
4) Tenants in Common
5) Community Property
1) Sole Ownership:
* You can purchase the property yourself by obtaining a mortgage loan and titling the property in your name only.
• If you were to die—sole property owned in your individual name would usually have to be probated to get it out of your name and into the names of loved ones.
This could possibly be avoided if you have a will outlining your designated beneficiary for your home.
• The warranty deed would specify that you are holding title in sole ownership form.
• If you are married and you hold the property as a sole owner—in most states you would be required to recognize your spouse’s marital interest.
2) Tenancy by the Entirety:
*If you are married and one spouse obtained a mortgage in their name only, you could add your spouse to the title and by law that would be Tenancy by The Entirety in some states.
If you are married and both spouses obtained a mortgage jointly, you could title the property in both names and by law that too would be Tenancy by The Entirety—in some states.
In either case you and your spouse would both have to consent to the transfer or sale of the home.
You would both have a disposable interest in the property during your lifetimes—meaning one of you could not sell or otherwise transfer the property (including refinancing) without the consent of the other spouse.
Upon the death of you or your spouse, the property goes to the survivor by law!
• Tenancy by the Entirety is used quite often in some states when the joint tenants are husband and wife.
It would be clearly spelled out in your warranty deed if you had this type of ownership or planned on this ownership type in the future.
Always remember that if you want to sell—you must get your spouse’s approval and if you die, your spouse automatically receives full title.
• Tenancy by the Entirety is similar to Joint Tenancy—however, the right of survivorship is permanent since one party “cannot” sever this ownership type.
You must be in an existing marriage to obtain this type of ownership.
• Many states and home purchasers now favor Joint Tenants with Right of Survivorship as the preferred ownership type for married couples.
3) Joint Tenancy with the Right of Survivorship:
*If you obtained a mortgage and wanted to hold or title the property with another person or person(s) in such a manner that, upon the death of one, the survivor or survivors take the entire property by operation of law—then joint tenancy with the right of survivorship should be given serious consideration.
Joint Tenancy with the Right of Survivorship is a type of ownership where you own an equal share of the property with one or more other persons regardless of the amount you may have contributed in purchasing the property.
If you and your spouse owned the property you would each have a 50% share of ownership.
If you owned the property with 2 investors you would have a 33.33% ownership.
If you owned the property with 3
other investors you would have a 25% share of ownership.
If the property is later sold or subdivided you would each get an equal share of the proceeds regardless of the amount you may have contributed at the time of purchase.
As you can see Joint Tenancy is basically an equal undivided ownership of property by two or more people.
If you have this type of ownership or are anticipating this type of ownership keep in mind that at any time during your lifetime you may sell your interest to anyone.
If one owner dies, the remaining owner(s) automatically by effect of law get(s) the deceased owner’s share of interest in the property so there would be no need for probate.
If you were the owner and you died your heirs would not be entitled to anything by law.
Be sure to include Joint Tenancy with the Right of Survivorship (not just Joint Tenancy) on your deed—because if you don’t some states will assume you are tenants in common without rights of survivorship.
• Many married couples select Joint Tenancy with the Right of Survivorship.
• In Joint Tenancy the four unities of time, title, interest and possession is vested to each joint tenant. Each joint tenant has an undivided right to possess the whole property and a proportionate right of equal ownership interest.
• If you were to die your interest automatically goes to the surviving joint tenant(s) by operation of law.
• In most states in order to sell the property or mortgage (refinance) the property all of the owners must be in agreement.
4) Tenancy in Common:
*Often used if you were married or unmarried and (one person) you obtained a mortgage and you wanted to title the property with another individual.
If you wanted to purchase a property with an investor, your friend, or others where you would each have an undivided interest, which you could sell or divide at any time, and upon death of one is passed to the person(s) designated in the deceased tenant’s will (or by intestacy if no will) and “does not” pass automatically to the surviving tenants in common.
If you are considering this type of ownership you must be keenly aware that if any of the owners die the deceased owner's share would go to his or her heirs and “not” the surviving owner(s).
"Be sure you clearly understand this prior to entering into this type of ownership as it can—and has led to many disputes and lawsuits over the years—with various owners."
• If you obtained a mortgage with a number of other people and you all obtained a mortgage and were on the note you could also title the property as Tenancy in Common.
Many unrelated investors use this type of ownership when purchasing property.
• If you own a property as Tenants in Common you can withdraw, mortgage, or sell your separate piece of the property.
• Always remember that in an ownership title held as a tenancy in common, each owner has an undivided interest in the entire property.
• Each tenant has the right to possession of the whole property and there is no right of survivorship.
Each tenant has a distinct proportionate interest in the property, which passes by succession.
• There is a presumption in many states that a conveyance to two or more persons is a tenancy in common—if not otherwise stated on the warranty deed.
5) Community Property States:
*In Community Property States there is a special form of joint tenancy between husband and wife, each owning one-half.
Upon death, the decedent's interest passes in a manner similar to tenants in common. In the Warranty Deed you would see words that indicated the property was held as Community Property.
Community Property is a type of joint ownership that's recognized in some states and can only exist between a husband and wife. Each spouse's ownership rights in Community Property are set by "specific" state laws.
In the United States there are nine states that treat the property of married couples differently from the other 41 states.
These states are called "Community Property" states and they are listed below.
• New Mexico
If you are married and live in a community property state, the following property-ownership rules are usually applicable.
If you acquired property before you were married, this property belongs to you alone even after you are married.
If you accumulate property during your marriage it would be considered community property. You and your spouse would own an equal, one-half interest in this property.
If you were to receive personal gifts or inheritance "after" you are married, you would continue to own that property separately.
Be aware of your estate planning/wills—whether you live in a community property state or anywhere else as state laws vary.
Other Key Points:
By properly understanding your state laws you can more effectively plan your and your family’s financial future.
Be sure to use competent legal professionals when trying to determine the best type of ownership—as state laws can, and do change.
Analyze the property types listed above and make a determination of what you feel is the best choice for you and your family.
Be sure to obtain competent legal or other professional advice as there can be serious legal ramifications based on the choice(s) that you make
Also be sure to go to the warranty
deed link below to learn more about the types of deeds that are available that could
benefit you and your family.
If you feel you need to improve your credit and finances it is critical that you click on the above link to go to the most empowering personal finance improvement web page for consumers that can be found on the internet.
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