- Community Reports
Please note:- The list below is not exhaustive, is intended for information purposes only and is not a recommendation on how to take title in U.S. real property. Buyers should therefore not rely on these definitions and should carefully consider their decision prior to closing and seek legal advice should they be unfamiliar with the most suitable ownership choice for their particular situation. It is also the case that some states have additional laws or restrictions on the way you may hold title; so getting professional advice in this area is imperative.
Where a non-resident buyer subsequently chooses to make changes to how they hold title e.g. by adding or removing an individual or transferring to an LLC or other entity, it is strongly recommended that they seek advice prior to the transfer as they may be subject to gift tax or FIRPTA withholding tax etc. on the transfer of the asset.
Sole Ownership – Sole Ownership can be described as ownership by an individual or legal entity capable of holding title (for example an LLC or an LLP). The most common Sole Ownerships are held by single men and women, married men or women who hold property apart from their spouse and businesses with a corporate structure allowing it to invest in or to hold an interest in real estate.
Tenancy by the Entirety – A few states in the U.S. offer a specific form of joint tenancy, called Tenancy by its Entirety, exclusively to married couples. Husband and wife hold title together and must make all decisions on the property jointly. This is beneficial if one spouse has a large debt, as creditors cannot go after this type of jointly owned property. When one spouse dies, the other gets full title to the property.
Tenancy in Common – A broader way for a few people to hold title together is called Tenancy in Common. In this way, multiple people can hold either equal or unequal portions of one property. For example, two people can each own 50 percent of the property, or one may own 70 percent with the remaining 30 percent split between other individuals. Any combination is acceptable. Any owner can independently sell, give away or “will” his or her share of the property at any time. However, any transfer could potentially cause some friction between the co-owners, so it is standard procedure to have a written agreement between the owners specifying how one can transfer his or her interest in the property.
Joint Tenancy with Right of Survivorship – Two or more people may hold title together in a form of ownership called Joint Tenancy. In this form of ownership, each owner has equal rights to the property as a whole. Should one of the owners die, under the right of survivorship, the deceased’s share will be automatically transferred to the co-owners of the property, not to the heirs of the deceased.