What are the differences between some common forms of property ownership?
There are a variety of ways that one can hold title to property:
Sole Ownership: owned entirely by one person. Words in the deed such as “Bill, a single man” establish title as sole ownership.
Tenants in Common: a form of co-ownership where property is owned by two or more persons at the same time. The proportionate interests and right to possess the property between the tenants in common need not be equal. Upon death, the decedent’s interest passes to his or her heirs named in the will who then become new tenants in common with the other tenants in common. Words in the deed such as “Bill, John and Mary as tenants in common” establish tenancy in common.
Joint Tenancy: a form of co-ownership where property is owned by two or more persons at the same time in equal shares. Each joint owner has an undivided right to possess the whole property and a proportionate right of equal ownership interest. When one joint tenant dies, his/her interest automatically passes on to the surviving joint tenant(s). Words in the deed such as “Bill and Mary, as joint tenants with right of survivorship” establish title in joint tenancy. This form of ownership is not available in all states.
Tenancy by the Entirety: a special form of joint tenancy when the joint tenants are husband and wife — with each owning one-half. Neither spouse can sell the property without the consent of the other. Words in the deed such as “Bill and Mary, husband and wife as tenancy in the entirety” establish title in tenancy by the entireties. This form of ownership is not available in all states.
Community Property: this special form of ownership between spouses is only available in “community property” states. Upon death, the decedent’s interest passes in a manner similar to tenants in common. Words in the deed such as “Bill and Mary, husband and wife as community property” establish community property ownership.
Trusts: While not technically a form of ownership, you may own real property through your Living Trust. Upon your passing, your interest would pass to successor trustees and/or beneficiaries you have designated in your trust.
What is the purpose of “recording” a deed?
When you purchase real property, you receive a written document called “the deed” which transfers the ownership of the property from the buyer to you as the purchaser. The deed gives you formal title in exchange usually for a specified amount of money. The transfer of interest in real property is not complete until the deed is delivered to you. The deed should be recorded immediately with the county clerk in the county where the property is located. By recording the deed, you give notice to all future potential buyers of that property that you now have an ownership interest in that particular piece of real property. Recording also tracks the chronological chain of ownership from a series of buyers and sellers. Before you purchase real property, a search is conducted at the county clerk’s recording office to confirm that the seller (as well as all previous sellers) has legal title to the property in question. Title insurance typically performs this function to determine whether any defects occurred in prior conveyances and transfers. If so, such defects may then be pointed out and excluded from their coverage.
What is a quitclaim deed?
A quitclaim deed transfers or “releases” to the person acquiring the property whatever present interest the grantor has in that property. Unlike a grant deed, a quitclaim deed carries with it no express or implied covenants or guarantees. Therefore, if the grantor has no interest in the property, a quitclaim deed conveys nothing.
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