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Buying a house is one of the biggest investment decisions a person makes in their lifetime. When buying real estate with someone else it’s imperative you choose the correct tenancy; how you will hold title and ownership with that person. While many folks go on to live long and prosperous lives together not all are as fortunate. Separations, divorces, death, and other unforeseen events can cause a slew of issues if the deed is not prepared with the proper tenancy.
Here is what you need to know:
Unmarried couples purchasing a property have 2 options:
Joint Tenants with the Right of Survivorship
Offers equal percentage of ownership, the property automatically passes to the surviving owner upon the death of one without the need to probate the estate.
Tenants in Common
Each party owns a fractional interest in the property, i.e. 50/50, 75/25, etc. Upon the death of one owner, interest passes to the decedent’s heirs.
* If no tenancy is indicated in the deed they are defaulted to and assumed as Tenants in Common; even if they married after acquiring title.*
Married couples purchasing a property also have 2 options:
Tenants by Entirety
Offers ownership as a whole. It safeguards against a judgment filed against one spouse and it ensures one spouse cannot transfer or encumber any portion of the property without the other. When a couple gets married, it is advised to have their deed changed to reflect “tenants by the entirety” so they can then get the added benefits that Tenants by the Entirety provides.
Tenants in Common
Each party owns a fractional interest in the property, i.e. 50/50, 75/25, etc. Upon the death of one owner, interest passes to the decedent’s heirs. This tenancy is sometimes used when the buyers have married for a second time and are taking their children into account when considering who they would like to inherit their portion of the property.
At Trident Land Transfer, we will always provide you with your options to make sure you have the knowledge available to make the best decision for you or your clients.