Buyers are often a little surprised to learn as the closing approaches that an important decision remains: “how would you like to take title?”  Confusion with this topic is understandable: this concept uses arcane terminology and is not generally discussed outside of the context of buying property. It’s high time that this important concept is discussed so that Buyers can make an informed decision.

The Basics: In most circumstances, if you are purchasing a property by yourself, you don’t have any decisions to make–you will take the property “individually.” There are three ways to take title with another person–tenants in common, joint tenants, and tenants by the entirety. Contrary to what these names suggest, these terms have nothing to do with leases or renting. Each refers to a different kind of ownership of property shared between two or more people.

  • Tenants in Common:  Under this form of co-ownership, two or more people each own a share of the property. These shares can be unequal in size and can be freely transferred without the other owner’s permission. Each owner has a right to occupy and use all of the property. Tenants in common have no right of survivorship, that is, if one of the owners dies, that person’s interest would pass under their estate by will or intestacy.
  • Joint Tenants: Unlike tenants in common, joint tenants have equal shares of the property. Each may use or occupy the entire property. Possibly the most significant difference between a tenancy in common and joint tenancy, joint tenants have an automatic right of survivorship, that is, if one owner dies, the other owner(s) will be vested with the deceased owner’s interest in the property.
  • View More: by the Entirety:The law treats married individuals who elect to take title as tenants by the entirety as one person. Importantly, tenants by the entirety enjoy an automatic right of survivorship–though technically speaking, nothing transfers at the death of the other spouse as each owned the “entirety” of the property. Further, neither party can transfer his or her interest in the property without the permission of their spouse and any encumbrance, e.g. a second mortgage granted by one spouse, does not encumber the non-granting spouse’s interest in the property. Similarly, the creditors of one spouse cannot levy against the property interest held by the other spouse.

Sophisticated real estate investors have many more options when it comes to taking title. There are vehicles in which the investor can take title, including: realty trust, investment trust, limited liability company, corporation, just to name a few. These vehicles can provide tax benefits, limitation on liability, and greater anonymity, but the intricacies and benefits are too numerous to discuss here. With rare exception, the vast majority of residential consumers will take title individually, in a tenancy in common, joint tenancy, or tenancy by the entirety.

Each of these types of ownership has advantages and disadvantages. Prospective owners should evaluate their specific situation and needs, with the help of an experienced Real Estate attorney, to be sure that they are selecting the right form of co-ownership.

Stiles Law, with offices located in Boston and Marshfield, Massachusetts, is a firm concentrating in real estate conveyancing and mortgage lending services, representing buyers, sellers, borrowers, banks, mortgage companies, investors, builders and developers in all of their real estate and mortgage transactions. Stiles Law serves all areas of eastern Massachusetts–the North Shore, Boston, and Cape Cod, in addition to the entire South Shore, including: Plymouth, Kingston, Duxbury, Hanover, Pembroke, Marshfield, Scituate, Norwell, Cohasset, Hull, Hingham, Weymouth, Braintree, and Quincy.

Copyright © 2014 Stiles Law, All rights reserved. Stiles Law is a Massachusetts licensed law firm and all content is based on Massachusetts law. The information presented above is meant to be used for general informational purposes and it should not be construed as legal advice or legal opinion on any specific facts.