Forms of Ownership


...selecting the right form of ownership

Since the escrow process manages the transfer of ownership, or Title, from one entity to another - it behooves one to consider the manner of ownership they want their new property to take. Your decision will establish the permanent and legal ramifications of your title. Since each form of ownership brings a different set of rights and obligations, here are some thoughts on each of the more popular forms.

Sole Ownership

This is the simplest form of ownership in which a single entity owns the entire interest in the property. In most cases the Sole Ownership is selected by an unmarried person. They have right to convey the property to someone else without any other consent.

If the sole owner is married, title may be vested in them as a married individual with "sole and separate property." In the event the owner is married and wishes to convey an interest in the property to someone else - the title insurance firm may require that the spouse sign a release to any right or interest they may have in that property.

Community Property

This form of ownership gives a husband or wife the right to transfer or dispose of one half of the property either by sale or by will. Community property is distinguished from Separate Property that was acquired in most manners prior to the marriage.

Community Property ownership is only recognized in Arizona, California, Idaho, Nevada, New Mexico, Texas, Washington, and Wisconsin.

Tenancy in Common

This form of ownership gives all of the owners in a property rights in the entire property, even though they may only own a fractional interest. They are free to sell, or transfer - via will - their ownership interest in the property. They may not, however, convey the property itself… only their interest.

Although a common form of ownership, Tenancy in Common can cause serious problems if written instructions outlining operating procedures and disposition do not exist.

Joint Tenancy Survivorship

Joint Tenancy with Right of Survivorship is where two or more people, married or unmarried, own the property together. When one of the owners passes away, their share automatically goes to the surviving owners. The last surviving owner ends up being the sole owner of the property.

Property you own in Joint Tenancy with Right of Survivorship cannot be left to someone in your will. At the moment of your death, all interest in the property goes to the surviving members.

To create Joint Tenancy Survivorship, title must have been acquired at the same time and with the same conveyance that includes a clause expressly stating the intention to create a Joint Tenancy title.

Tenancy by Entirety

This is similar to Joint Tenancy Survivorship but applies only to married couples. When either the husband or wife die, the entire interest in the property goes to the surviving spouse. Not all states recognize this form of ownership - and of those that do, some only recognize it for real estate and not stocks and other assets.