What are the differences between some common forms of property ownership?
What is the purpose of “recording” a deed?
What is a quitclaim deed?
Since my spouse passed away, I want to re-title my house so I own it jointly with my adult children. Is this a good idea?
What is the “Closing”?
Q: What are the differences between some common forms of property ownership?
There are a variety of ways that one can hold title to property:
Sole Ownership: owned entirely by one person. Words in the deed such as "Bill, a single man" establish title as sole ownership.
Tenants in Common: a form of co-ownership where commercial or residential property is owned by two or more persons at the same time. The proportionate interests and right to possess the property between the tenants in common need not be equal. Upon death, the decedent's interest passes to his or her heirs named in the will who then become new tenants in common with the other tenants in common. Words in the deed such as "Bill, John and Mary as tenants in common" establish tenancy in common.
Joint Tenancy: a form of co-ownership where property is owned by two or more persons at the same time in equal shares. Each joint owner has an undivided right to possess the whole property and a proportionate right of equal ownership interest. When one joint tenant dies, his/her interest automatically passes on to the surviving joint tenant(s). Words in the deed such as "Bill and Mary, as joint tenants with right of survivorship" establish title in joint tenancy. This form of ownership is not available in all states.
Tenancy by the Entirety: a special form of joint tenancy when the joint tenants are husband and wife -- with each owning one-half. Neither spouse can sell the property without the consent of the other. Words in the deed such as "Bill and Mary, husband and wife as tenancy in the entirety" establish title in tenancy by the entireties. This form of ownership is not available in all states.
Trusts: While not technically a form of ownership, you may own real property through your Living Trust. Upon your passing, your interest would pass to successor trustees and/or beneficiaries you have designated in your trust.
Back to the top.
Q: What is the purpose of “recording” a deed?
When you purchase real commercial or residential property, you receive a written document called "the deed" which transfers the ownership of the property from the buyer to you as the purchaser. The deed gives you formal title in exchange usually for a specified amount of money. The deed should be recorded as soon as possible with the county clerk in the county where the property is located. By recording the deed, you give notice to all future potential buyers of that property that you now have an ownership interest in that particular piece of real property. Recording also tracks the chronological chain of ownership from a series of buyers and sellers. Before you purchase real property, a search is conducted at the county clerk’s recording office to confirm that the seller (as well as all previous sellers) has legal title to the property in question. Title insurance typically perform this function to determine whether any defects occurred in prior conveyances and transfers. If so, such defects may then be pointed out and excluded from their coverage.
Back to the top.
Q: What is a quitclaim deed?
A quitclaim deed transfers or "releases" to the person acquiring the property whatever present interest the grantor has in the that property. Unlike a grant deed, a quitclaim deed carries with it no express or implied covenants or guarantees. Therefore, if the grantor has no interest in the property, a quitclaim deed conveys nothing.
Back to the top.
Q: Since my spouse passed away, I want to re-title my house so I own it jointly with my adult children. Is this a good idea?
While sharing title to property may avoid probate after your death, naming "joint tenants" may have a number of adverse consequences. In effect, adding a joint tenant to your home deed means that you have now gifted a portion of that property to those named. And when you make gifts in excess of certain annual amounts in value within a calendar year to someone other than a spouse, the IRS requires you to file a gift tax return, and in some cases pay gift taxes. When gifting an interest in your home to anyone, you also are endangering your own financial security. If your new co-owners have creditors or are involved in a divorce, your assets will be at risk.
You should consult an attorney and accountant about different estate planning options available to you.
Back to the top.
Q: What is the “Closing”?
The closing is a final meeting of all the parties involved in the real estate transaction. The bank convenes with sellers and buyers to sign and officially transfer title to the buyers. A representative of the title insurance company will also be present to facilitate the transfer of title. The title company is also responsible for recording the new deed.
Before arriving at the closing, the buyer should visit the property to assure that everything is in working order. That means turning on the heat and air conditioning and checking for leaks and other problems. After the closing any problem is the buyer’s responsibility. The buyer should also have all the necessary paperwork and certified checks for the seller and for various closing costs. Otherwise, if the mortgage, title, homeowner’s insurance and other documents required by law are not completed and brought to the closing table, the closing may be delayed.
*These FAQs are for informational purposes only and are not legal advice. Individuals and corporations seeking a formal opinion should seek specific advice about your particular circumstances.
Back to the top.