How Do I Want to Hold Title?
vs.
TENANTS IN COMMON
WHAT IS THE DIFFERENCE?
a. JOINT TENANTS WITH RIGHTS OF SURVIVORSHIP AND NOT AS TENANTS IN COMMON
If you hold title as “Joint Tenants With Rights of Survivorship and Not as Tenants in Common,” the real property described in the deed (and that property only) will automatically pass to the surviving Joint Tenant(s) upon the death of the other without having to go through the probate process. The property is a non-probate asset, but this does not mean that the transfer is non-taxable. That is a separate estate planning matter beyond the scope of the real estate closing representation. Many people prefer to make a Last Will and Testament for the disposition of assets at death. If you do not have a Will, your property will pass to your heirs through the laws of intestacy. Generally, if you are married and do not have a Will, one-half (1/2) of your assets will pass to your spouse and one-half to your children upon your death. If you have no children, all property will pass to your spouse.
The one drawback to Joint Tenancy is that, arguably, if one tenant gets a lien on himself or herself, the lien attached to 100% of the property. Whereas, if you were tenants in common, a lien against one of the tenants can only attach to that tenant’s interest in the property (i.e. if husband and wife, and husband gets a judgment against him, it can only attach to his 50% equity interest). This becomes especially important in divorce issues.
b. TENANTS IN COMMON
As Tenants in Common, each tenant owns their respective fractional interests in the property (i.e. if two people, then 50% each unless otherwise delineated in the deed). If one dies, then his or her estate must be probated to sell or otherwise mortgage the property. This could take as long as nine months, especially if the decedent had no will. If children (<18 year old) inherit through intestacy, then a conservatorship will have to be established and special orders issued to either get children off of title or otherwise re-finance. This can be avoided by having a Will.