A Brief Overview of Tenancy
Tenancy refers to the legal manner that one takes title to real property. In preparation for settlement, you will be able to choose the manner of tenancy.
An individual buyer is typically taking title in fee simple, but when two or more of the individuals hold title, there are three common law forms to choose from: joint tenants, tenants by the entirety, or tenants in common.
Sole Owner
For reference, this is individual tenancy, the sole ownership of the property.
Joint Tenancy With the Right of Survivorship
Joint tenancy is a popular form of ownership for family members taking title together. This type of tenancy is between unmarried individuals with equal rights and obligations, and it usually embodies four essential unities: time, title, interest, and possession. The joint tenants must acquire the same interests and title at the same time, and they have identical rights to the property (possession). The result of those four unities is that each joint tenant owns the entire property, not just a share, and this ownership is subject only to the rights of the other joint tenants.
In a joint tenancy with the right of survivorship, a deceased tenant’s interest is automatically extinguished and the rights to the property are passed to the surviving tenants without going through probate. If all other tenants are deceased, the one remaining tenant becomes the sole owner of the property, by operation of law.
Tenancy by the Entirety
Tenancy by the entirety is similar to joint tenancy, but this tenancy is reserved for legally married couples. The parties have an equal right of possession and enjoyment during their joint lives, with the right of survivorship. Survivorship means that when one partner dies, the property goes to the surviving tenant by operation of law. This is popular for married couples because it also offers a level of protection from judgments and liens. Generally, judgments and liens will only attach to tenants by the entirety property if the judgments and liens are in the name of both spouses.
Tenancy in Common
A tenancy in common is the ownership of a property by two or more individuals, and each one has a separate and divided interest in the property with no right of survivorship. Tenancy in common allows the tenants to designate percentages of ownership interest. Tenants in common can also sell their interests without the consent of the other tenant(s). Finally, a tenant in common can pass the interest to heirs, by will or in accordance with applicable laws, upon death. For all these reasons, tenants in common is popular for individuals or entities taking title for business reasons or for those who want to keep their property interest separate and apart from the other owners.
For additional information on this topic contact Evelyn Miller, Partner, at 202-753-7400.
