Invested in Vesting

When purchasing real estate, one of the first questions a buyer is asked is “how do you wish to take title?” While it seems like such a simple question, it is really quite the opposite. On almost every transaction, the title agent is asked to provide the buyer with the “correct” way to take title. Like most responses to legal questions, the answer is typically, ” it depends”. There is no single “correct” way to take title to real property. There are several different forms of ownership by individuals, and it is important for the buyer to consult with his/her local real estate attorney to determine the “best” way for a buyer to take title. So, what are the different forms of ownership from which to choose?

“Single” or Sole Ownership: When the buyer is a single person (and by single, we are not referring to marital status), the most basic way to own property is called “sole ownership” or taking title as “single” – only one person owns the property. Generally, sole ownership is held by unmarried individuals. However, a married individual may hold title as a “single” if that person is not including a spouse in the transaction (perhaps for an investment property or a non-homestead property). Sole ownership does not provide any tax or estate planning benefits, nor does it provide any protection against claims of creditors.

Tenants in common: When two or more unmarried individuals decide to take title to real property without any form of tenancy recited, Florida presumes “tenancy in common”. Tenants in common co-own real estate without any rights of survivorship; if one owner dies his or her interest in the property will pass to that decedent’s estate. The property will pass under a will or through the laws of intestacy (no will). When the property is owned as tenants in common, each co-owner owns an interest in the property and, unless otherwise specified, a presumption of equal ownership exists. If ownership is to be other than equal, the percentage of ownership must be specified in the deed. For example, if two individuals buy property as tenants in common, it will be presumed to be owned 50/50. If one owner is to have a 75% interest in the property, and the other owner is to have a 25% interest in the property, these percentages must be stated in the deed (i.e., an undivided 75% interest, and an undivided 25% interest).

Joint tenants with rights of survivorship: If two or more buyers want to make certain that the property will pass to the survivor upon the death of the one owner, “joint tenancy with rights of survivorship” would be the appropriate way to take title. “Joint tenancy with rights of survivorship” permits one or more persons to co-own property, but each individual (joint tenant) will hold a full equal share in the property. Additionally, the joint tenants all equally share control and legal ownership of the property. Therefore, if one tenant dies, that interest will pass to the surviving joint tenant(s) automatically. “Joint tenancy with rights of survivorship” is often used when real property is purchased by parents and children, siblings, boyfriend/girlfriend, significant others, and sometimes business partners.

Tenants by the entirety: “Tenancy by the entirety” shares many of the same characteristics as “joint tenancy with rights of survivorship”; however, this form of ownership is exclusively for married people. If married persons take title as “tenants by the entirety”, each spouse will automatically have rights of survivorship. Additionally, neither spouse can sell or transfer his or her ownership interest without the consent of the other spouse. Generally, this is the preferred method of holding title by married persons due to the survivorship rights and the creditor protections it affords. For example, property held as “tenants by the entirety” is typically exempt from judgments obtained against one spouse for that spouse’s individual debts or liabilities. Furthermore, judgment creditors cannot seize the property from the other spouse.

These are the four most common ways individuals may take title in Florida. There are additional ways of taking title that involve estate planning strategies such as life estates and titles granted to a trustee. However, those are beyond the scope of this article and will require advice from a buyer’s estate planning attorney. As always, if you have any questions about how to take title when purchasing real estate, please contact your local real estate attorney to provide appropriate guidance and legal advice.

Sincerely,
Berlin Patten Ebling, PLLC

Article Authored by Mallory Moretti, Esq. mmoretti@berlinpatten.com

This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.

All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.

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