One would think that when you purchase a piece of property you own it. While that is true, we must also stop to consider what kind of ownership we have. There are actually several different types of ownership, each with their own unique traits. Understanding the various types of ownership and how they affect a particular real estate transaction and the future of a piece of property is important for anyone looking to purchase property. So like taking the extra time to prepare your income taxes and file now rather than paying a penalty and filing late, it is a smart move to understand all the various things that go into property ownership before purchasing a piece of property.
Tenancy in serveralty, sometimes called ownership in severalty, exists when a single entity or person owns a piece of property. This type of ownership is the most inclusive as it allows the owner of the property the greatest degree of control over said property. Under this type of ownership, anything legal can be done with the property. This includes selling it, leasing it, gifting or passing to heirs.
Tenancy in common simply means there are multiple partners or entity who each owns a fraction of the property. The specifics of this division vary depending on the arrangement. The property can be equally divided amongst partners or ownership percentage can vary. Under this type of ownership, all partners, or a majority, must agree before the property is sold, leased, gifted or passed. There are several forms of joint tenancy as well.
Community property laws vary from state to state, but in general community property is any income or property that is received while legally married and is not considered separate property. These laws and guidelines are mainly important during divorces and estate planning.
Finally, land or property can be transferred to assist incapacitated adults or minors. It is primarily a legal way in which a trustee can maintain legal control over a piece of property to ensure that its beneficiaries remain well cared for.
Be sure to carefully review the type of ownership and how it will affect your rights prior to entering into a real estate agreement.