When it comes to real estate, people often think of investors, sellers, and buyers. But real estate is a part of everyone’s lives. Whether you’re renting out property, owning one, or operating a business that rents space, you’re dealing with real estate. As such, it’s a good idea for one to know as much about real estate as possible for practical reasons, and the more you know, the better you can decide when it comes to situations pertaining to properties. For now, we’ll be taking a look at the different types of real estate ownerships that you have to look out for when you’re investing, selling, exchanging, or bequeathing a property:
Starting with the simplest, sole ownership means that an individual or legal entity (such as a business) owns the title to a property. Sole ownerships are often held by single individuals, married individuals who opt to keep their properties separate/apart from their partners, or businesses. Sole ownership provides ease in transactions such as when selling or buying the property as there is no need to consult any other party for the approval of the sale, purchase, or exchange (in cases of 1031 exchanges). However, if the title holder or owner dies or becomes incapacitated without any wills or legal documentation, transferring of ownership could be problematic and prone to disputes.
Joint tenancy is when there is more than one individual or entities that hold the title of the property. In joint tenancy, the parties equally own the property and have the right to enjoy it and, upon the death of one of the owners, their rights are generally passed on to the surviving tenants. In joint tenancy, it’s not necessary that both parties are married nor related, although most joint tenancies are by married couples or relatives. However, any decision such as selling or exchanging the property requires the consent and approval of all parties, and the rights cannot be transferred by will upon death.
Joint Tenancy With Rights of Survivorship (JTWROS)
JTWROS is an ownership setup wherein if a tenant or owner dies, the rights are transferred to the remaining owners, but while the tenant or co-owner is alive, he/she can transfer it to another person.
Tenancy in Common
When it comes to a tenancy in common or TIC property, there are two or more persons that hold titles to the real estate and can enjoy the rights to the property as long as they are alive. However, unlike joint tenancies, tenants in common each have their own individual titles instead of one title. As such, ownership of the title can be transferred or sold while the tenant/co-owner is alive, or willed to other parties upon death.
Whether you’re investing, inheriting, or bequeathing real estate, it’s best to have knowledge of the different types of ownerships can help you make better decisions. You may end up inheriting a property from a deceased member or come across a piece of affordable real estate available in the market, and it’s important to know the type of ownership being offered to know your limits with regard to the inherited property or if the real estate being advertised is worth investing in.