Decide How To Hold Title

Overview

As future co-owners of real property, you must decide how to take and hold Title to the property.

How you hold Title forms the legal basis of your home co-ownership and dictates what happens if one of you passes away.

ℹ️ Title vs. Deed

Title is the legal right to own and use a piece of property. It is not a physical document; it's a concept. Title can be transferred through a Deed.

A Deed is a legal document that transfers property Title from one party to another. In a home purchase and sale, the seller and the buyer sign the Deed to transfer ownership from the seller to the (co-)buyer(s).

The method you choose to hold Title has broad implications for:

• Rights to the property
• Rules for property ownership and financial obligations
• Individual ownership interests (%)
• Taxes
• Beneficiaries

Two forms of Title are common in home co-ownership: Tenants in Common (TIC) and Joint Tenants with Right of Survivorship (JTWROS). Both Tenants in Common and Joint Tenants with Right of Survivorship allow multiple parties to participate as joint homeowners, regardless of marital status or familial relationship.

💡Fast Fact

Other methods of taking and holding Title as co-owners exist, like Limited Liability Companies (LLC) and Trusts, but these are less common in residential real estate. Since 98% of co-buyers choose Tenants in Common or Joint Tenants with Right of Survivorship, we will focus on these structures.

Tenants in Common (TIC)

In a Tenants in Common arrangement, each co-owner owns a separate and distinct share of the home. This means you can divide ownership interest among co-owners equally (1/3, 1/3, 1/3) or unequally (40%, 30%, 30%). Each co-owner's share can be sold, transferred, or passed on independently. This setup offers flexibility but requires clear agreements on sharing expenses, rights, and responsibilities.

Key Takeaways for Co-buyers:

• Flexible ownership percentages
• Individual control over your share
• No automatic right of survivorship; you decide who inherits your portion

Joint Tenants with Right of Survivorship (JTWROS)

In contrast, Joint Tenants with Right of Survivorship means that all co-buyers own the property equally. If one co-owner passes away, their share automatically goes to the surviving co-owners, bypassing the deceased's will or trust and avoiding Probate. This arrangement appeals to co-buyers who want clarity about the transfer of ownership if anyone dies.

Key Takeaways for Co-buyers:

• Equal ownership for all parties
• Automatic right of survivorship
• Less individual control over your share

‍