Holding Title to a Home
There are several options as to how title to a home can be held with advantages to each option. It’s important to know your options before signing the final papers.
SOLE OWNERSHIP For a single person buying a home, this is the most often used title-holding option. Even married couples can choose Sole Ownership if one of the spouses signs a quick claim deed terminating marital rights to the property. The primary reason couples would choose this option would be for business purposes.
TENANTS IN COMMON A piece of property can be owned by two or more people. Owners do not have to be living on the property & can own unequal shares of the property. For instance, three people can own a piece of property, with one person owning 50%, another owning 30% and the third owning 20%. This becomes especially important when the property sells or one of the owners wants to sell. He or she can sell their portion without the approval of the other owners. Tenants in Common is used especially with second marriage partners who want to leave a portion of their property to children from previous marriages.
JOINT TENANCY WITH RIGHT OF SURVIVORSHIP This option of title holding is most often used by married couples. Each has full title to the property & upon death of one spouse, the other spouse solely owns the entire property. This type of title holding does not require the edition of a Will to implement. A drawback to Joint Tenancy is that either owner of the property can transfer their share without permission from the other, possibly ending the Joint Tenancy & creating a Tenants in Common.
COMMUNITY PROPERTY To date, nine states allow couples to purchase property as Community Property. This means that each person owns 50% of the property & a Will must be in place stating who will get the 50% share upon death of either of the partners -- it is not automatic, as it is in Joint Tenancy with Right of Survivorship.
LIVING TRUSTS Utilizing a Living Trust is like having another “entity” own & control your assets, including your home. But that “entity” is yours, or others designated as trustees, who “own” the entity. While the creator of the Living Trust lives, the Trust is revocable (can be changed). Upon the death of the creator of the Living Trust, it becomes irrevocable (cannot be changed), & probate costs & delays.