Holding Title

Mike Cooke December 1, 2016 Buyer Insights Improvements

If you are buying a property with another person, you have to decide how you want to hold title to the property. If you are the sole purchaser of the property, you can ignore the rest of this post.

The two options for holding title are: (1) Joint Tenants or (2) Tenants-In-Common. A basic difference is what happens when an owner dies. As Joint Tenants, a deceased owner’s share of the property passes directly and immediately to any other owners. As Tenants-In-Common, the deceased person’s share of the property is distributed according to that person’s will or by operation of law if there is no will.

To illustrate the importance of this matter, consider this story (reportedly true): A man and a woman with grown children from prior marriages bought a house and paid cash with each contributing $250,000  to purchase a half million dollar home. They choose to hold title as joint tenants. On the way to the airport to begin a vacation, they were in a car crash. The woman died at the scene and, therefore, her half of the property immediately transferred to the man. The man died a few hours later in the hospital. The man’s children ended up with the house. The lady’s children were out $250,000 that arguably should have been part of their mother’s estate. Holding title as Tenants-In-Common would have been a better choice for this couple.

While we can give you this kind of basic information about the difference between the two ways of holding title, we cannot give you advice about which option to choose. Some circumstances where you might want to consult an attorney about this matter include, but are not limited to, cases where you have prior marriages, children from prior marriages, pre-nuptial agreements, big differences in ages, any situation where there is a co-signer, if you are involved in a lawsuit or where you have complex estate planning issues.

Even though you have indicated in the purchase contract how you plan to hold title, you can change this prior to closing. Let your agent know if you need to rethink this matter so that they can notify the title company to use the correct deed for the property at the time of closing.

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