When two or more people purchase property together, whether it is a residential marital home or an investment property, it can be an exciting affair full of plans, opportunities, and possibilities. Amid the excitement, however, it is integral to consider how the property will be titled and held. In New York, for instance, there are three different ways in which two or more people can own property and hold title. The three types of property ownership are tenancy in common, joint tenancy, and tenancy by the entirety. Each type of ownership has its own advantages and disadvantages, features, and criteria.
There are many reasons why people choose to purchase property jointly. The most common is marriage. Of course, marriage is only one reason people decide to co-own a property. In New York City, there are many investors, unmarried couples, family members, and friends who co-own property. Co-owning property can be an appealing solution financially. Many people own property as investment opportunities, while others want to keep property within their family. Owning property a certain way can ensure that it is held by the right people, protected from creditors, and/or disposed of without issue. Therefore, before purchasing any property, it is important to consider how it will be used and whether it will be kept or disposed of in the future. Knowing these factors will help determine which kind of ownership would work best under the circumstances. Moreover, it would be wise to hire a real estate attorney who is familiar with real estate law in New York. An experienced real estate attorney who is well-versed in tenancy matters and the different kinds of ownerships can help co-buyers or co-owners identify the option that is better suited for their situation and objectives.
Tenancy By The Entirety
When a couple marries and buys a property, they usually take ownership of the property as tenancy by the entirety. In actuality, no other types of co-owners or co-buyers are able to take title as tenants by the entirety unless they are married. Under a tenants by the entirety title, the spouses each own 100% interest in the property. In other words, the property is not divided between the spouses. In order for a tenancy by the entirety to be valid, a couple must be married and remain married when they acquire a property. If the spouses divorce, the title then changes to tenants in common. Spouses are not required to hold title as tenants by the entirety. They can specify the kind of ownership they want in the property’s deed. Or, if the spouses wish to modify the tenancy by the entirety to another form of ownership, they may do so as long as both parties agree and consent.
In New York, if one spouse dies, the property held in a tenancy by the entirety is solely passed to the surviving spouse. Any debt owed by the decedent while alive that could affect the property no longer becomes an issue to the surviving spouse. As a result, the spouse owns the title of the property free and clear from their spouse’s creditors.
Joint Tenancy
In a joint tenancy, each co-owner owns an interest in the property. For instance, if there are four joint owners, they would each have a one-fourth ownership share. If one of the owners wishes to sell his or her interest in the property, they may do so without the consent of the other owners. However, if a joint tenant wants to sell the property, a dispute could ensue, which might necessitate legal action and the involvement of a real estate attorney and the court. If, however, a joint tenant passes away, their interest in the property automatically transfers to the other joint tenants under the right of survivorship indicated in the joint tenancy.
A joint tenancy should not be created without the assistance of a real estate attorney who has years of experience with ownership titles and deeds. The phrasing in the deed must be carefully laid out in order to establish a viable joint tenancy.
Tenancy In Common
Tenants in common is another way to co-own a property. In a tenants in common deed, the parties involved own equal or unequal shares of the property. As such, it is based on the percentage of ownership of a property. For example, if three people owned a property under a tenants in common title, one of them could own 20% of the share while the other two own 40% each. Moreover, each tenant has an equal right to the property, even if their share is less than the other tenants in common. In New York, when two people own a property and are not married, the state law assumes that the property is held under a tenants in common deed. A tenancy in common deed is also the most popular form of property co-ownership.
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