When it comes to buying real estate, most people assume there’s only one way to do it: either you own the property or you don’t. Sounds simple enough. But the fact is, there are different types of real estate ownership, each with their own legal ramifications. It’s worth noting too that having ownership interest in a property is not quite the same as owning it outright.

The 4 Types of Real Estate Ownership

Sole Ownership or Tenancy of Severalty

Sole ownership is a type of property ownership where one individual (or legal entity) has exclusive rights to a property.

By far the most simple, sole ownership means that person is free to sell, gift, or bequeath the property to anyone without needing permission of any kind. Examples of this type of property ownership include:

• A single person who owns a house or other property
• A trust that owns property on behalf of a beneficiary
• A corporation that owns real estate

Tenancy by the Entireties

A specific type of property ownership that applies to married couples, allowing them to jointly own property as a single entity. Tenancy by the entireties happens when a married couple buys real estate together, and the deed should reference ownership as husband and wife.

Both spouses have equal rights to the property, and if one passes away, the other spouse automatically inherits the property. Also, if either the husband or wife run into financial trouble, a creditor cannot put a lien on the land unless both spouses owe the debt. This form of ownership is also commonly referenced as t/e or TBS.

Tenants in Common

When two or more people own a portion of real estate separately, they’re called tenants in common. This can also be called fractional ownership of real estate. Even though they are unified in owning the property, each person operates individually regarding their personal share. Unless otherwise stated, most real estate ownerships with more than one owner are tenants in common, and the court generally favors this type of co-ownership over a joint tenancy (see below). A few key distinctions separate tenants in common from the other types of ownership.

• The property may be split equally or unequally undivided. For example, three people own one piece of real estate, but one person owns 50% while the other two each own 25% each. Unless otherwise stated on the deed, the courts will assume the property is equally divided.

• If one of the owners dies, this share of the property goes to the deceased’s heirs, not to the other owners. The heir will then become the new tenant in common, and take control of his or her portion of the real estate.

Joint Tenancy

Although not as common, sometimes two or more people will own real estate together in a joint tenancy. Unlike tenants in common, when a person dies as a joint tenant, their share of the property goes to the remaining co-owners. Known as survivorship, this must be clearly stated in the deed. Otherwise the ownership will automatically be assumed as a tenancy in common. In order to create a joint tenancy, four key details must exist:

• Time. Each owner buys the property at the same time.
• Title. One deed states the names of every owner.
• Interest. The property is divided equally among everyone.
• Possession. Owners hold an undivided interest, meaning the right to use and possess the entire property.

When to Ask a Real Estate Attorney for Help

Disclaimer:
The content of this blog is intended to be general and informational in nature. It is advertising material and is not intended to be, nor is it, legal advice to or for any particular person, case, or circumstance. Each situation is different, and you should consult an attorney if you have any questions about your situation.