Ownership of Real Property
Separate Ownership
Property owned by one person or entity is known as sole and separate ownership , or ownership in severalty.
Concurrent Ownership
When property is owned by two or more persons or entities at the same time, it is known as concurrent ownership , or co-ownership.
Four Types of Concurrent Ownership
• Joint Tenancy
• Tenancy in Common
• Community Property
• Tenancy in Partnership
Joint Tenancy
When two or more parties own real property as co-owners, with the right of survivorship, it is called joint tenancy . The right of survivorship means that if one of the joint tenants dies, the Surviving partner automatically becomes sole owner of the property. The deceased’s share does not go to his or her estate or heirs, but becomes the property of the co-tenant without becoming involved in probate. In addition, the surviving joint tenant is not liable to creditors of the deceased who hold liens on the joint tenancy property. Co-owners may sell their interest, give it away, or borrow money against it, without consent of the other joint tenants. Because of the right of survivorship, a joint tenant may not will his or her share.
Tenancy in Common
When two or more persons, whose interests are not necessarily equal, are owners of undivided interests in a single estate, a tenancy in common exists. Whenever some other form of ownership or vesting is not mentioned specifically, and there are co-owners, title is assumed to be a tenancy in common.
The only requirement of unity for tenants in common is the equal right of possession or undivided interest — as it is called. That means each owner has a certain equitable interest in the property (such as one-half interest, or one-fourth interest), but has the right to use the whole property. None of the owners may exclude any co-owner from the property, nor claim any portion of the property for exclusive use. Any tenant in common may sell, encumber, or will his or her interest, with heirs simply becoming a tenant in common among the others. One tenant in common cannot create an easement on the property without the consent of the other co-owners. A tenant in common must pay a proportionate share of any expenses incurred on the property, including money spent for repairs, taxes, loan payments, and insurance. When tenants in common do not agree on matters pertaining to the property, any of the co-owners may file a partition action, which asks the court to decide the fate of the investment.
Community Property
All property acquired by a husband and wife during a valid marriage——except for certain separate property——is called community property . Separate property includes all property owned before marriage, all property acquired by either of the parties during marriage by gift or inheritance, and all income derived from separate property. If spouses want to maintain the status of their separate property, they must be very careful not to co-mingle it with their community property. Separate property (such as an apartment building with a negative cash flow) may not be supported with community property funds, nor can the income of either spouse be used in any way to maintain separate property. Any income, including wages from either spouse, is considered community property.
Community property cannot be sold or encumbered by only one of the partners. Either spouse may buy real or personal property without the consent of the other; both are bound by the contract made by either one, unless the new property is bought specifically as separate property, with funds from a separate property account. Either party may will one-half of the community property. If there is no will, the surviving spouse inherits all community property. This is important to know, particularly with multiple marriages, for estate planning.
Property may be owned with the intention that it go to one’s children, only to learn after the parent’s death that children of the first marriage are no longer natural heirs. If there is a subsequent husband or wife and no will has been made, the new spouse will become the natural heir to the real property. Regarding separate property, if there is no will, the surviving spouse gets one-half and one child gets one-half. If there is more than one child, the surviving spouse gets one-third and the children get two-thirds.
Tenancy in Partnership
Ownership by two or more persons who form a partnership for business purposes is known as tenancy in partnership . Each partner has an equal right of possession for partnership.
