Many ways to own real estate

Title to real estate can be held in a variety of ways depending on the type of owner, the interest held, and even the intended distribution after death.

Real estate may be owned by an individual or more than one person, a business entity, a trust, or it may be co-owned by any of these parties together.

An individual or other capable entity may own real estate as a sole proprietor. A person may own real estate as a single man or single woman, if not legally married or in a domestic partnership, or as a married man or married woman as his sole and separate property if a person bride wants to hold the title only in her name. In this situation, the title company securing the title will likely require the other spouse to sign a quitclaim deed relinquishing their interest in real property in order to establish that both spouses wish title to be granted to only one spouse in as his or her sole and separate property.

Two people can own real estate in different ways, but only married people or people living in a relationship can own it as joint property or joint property with right of survivorship. When held as community property, the property is owned equally and both parties must sign any cumbersome agreements, transfers or documents. Community of property with right of survivorship has the additional advantage of avoiding probate on the death of the first spouse or partner: the deceased’s interest ends and the entire real estate is automatically transferred to the spouse or partner survivor. As such, community property with right of survivorship is not subject to disposition by will or trust. In addition, this form of ownership can also have a tax advantage.

Married couples and unmarried co-owners, whether two or more, may hold the title of co-owners with right of survivorship. This type of ownership creates equal rights to the property during the lifetime of the owners and a right of survivorship upon the death of the co-owner. This means that on the death of a co-owner, all of his right of ownership is transferred in equal shares to the surviving co-owners as of right and therefore no probate is necessary. Therefore, property held by joint tenants is also not subject to disposition by will or trust. The co-ownership must be created at the same time, by the same assignment, and it must expressly mention the intention to create a co-ownership fund.

Parties wishing to hold undivided, equal or unequal fractional interests may own real estate as tenants in common. Co-ownership may not only involve unequal interests, but also vary in duration and occur at different times. Each tenant in common is also entitled to the proportional share or income of the property, but is also responsible for a proportional share of the expenses. Co-ownership does not entail a right of survivorship. Therefore, each tenant in common who owns a share of the building has the right to dispose of his share during his lifetime or by will or trust.

The ways to hold title to real estate vary from state to state, but the proper way to hold title to real estate is essential to achieving financial and estate planning goals. It is important to consult with a financial planner, tax professional and estate planning attorney to determine the type of property that meets all financial and estate planning goals.

Natalia Vander Laan is a lawyer in Minden.