Did you know that how you hold your title is a big deal? That’s right, the way you hold actually has a lot of legal weight you need to know about. Known as title vesting, this refers to your legal rights concerning property that you either own or are going to buy. Admittedly, there is a lot that goes into the home buying process. As such, you may not even consider how you should hold property title. That said, title vesting can help you if you choose to sell or refinance your home later on down the line. Title vesting can also affect your property if you pass away. In this guide, we want you to be clear on your rights associated with title-holding so that you are better prepared for the future.
Choosing the way you want to hold your title depends on why you’re buying property and what you intend to do with it, and what you wish to happen to your property when you pass away. Each way to hold a title gives you specific rights throughout your owning your home. It also gives direction to others for what happens if you or a different owner dies. One of the main goals of choosing proper vesting is so that you can avoid a court deciding ownership of your home, known as probate. Let’s look at some options you have regarding how you choose to hold your title. JTWROS (Joint Tenancy With Right of Survivorship) For most married couples, this option is often seen as the best way to hold title. It is also beneficial to those who are planning to own property with other family members. Joint tenancy with rights of survivorship gives everyone equal ownership rights. These rights automatically pass on to survivors if the owner of the property passes away. If you hold title with someone else with the right of survivorship, it’s important for you to understand that ownership can’t be divided up under this option. With this type of title vesting, it isn’t necessary for the owners to be married. What’s more, any number of people can own the property all at the same time. Community Property With Right of Survivorship This type of title-holding is intended only for married people. This is because marital status is very important when disclosing title holding. If you buy a home without disclosing that you’re married, you could potentially lose out on property rights to a spouse should you ever get divorced. In turn, this would prevent you from being able to sell your property in the future. Depending on where you live, your community property laws could be what decides who gets what property in the event of a divorce. The states that honor community property laws include:
In a state that honors community property, any real estate held jointly will be split evenly if a divorce occurs. However, marrying doesn’t necessarily mean that a spouse will be given ownership of the real estate. In states with non-community property laws, however, a property ownership title can be split up in amounts agreed to by both parties. If you’re not sure about your state’s legal ownership rights for property, you should contact a local real estate attorney. They can help you make the best decision in your title vesting. Tenancy in Common Maybe you want to buy a house with multiple people, and you determine that you want the way in which you hold your title to be based on the amount of money put down on the property. Tenancy in common lets you divide the interest unevenly, with any number of people able to hold title. Please be aware, though, that you will also need to decide which person gets the property owner’s tax benefits. It’s important to note that your local treasurer’s office isn’t going to divide up the property tax bill for you. As such, you will need to be the one to make this decision. Once again, it is best to speak with a real estate attorney who can help you make the best decision based on your situation. In this instance, each owner has their own individual legal interest in the home. As such, each has an equal right to own the property. If one of the tenants in common passes away, it’s important to know that their rights don’t go to the other owners automatically. On the contrary, the interest goes to either heir or a probate court. This happens when there isn’t a living will in place. If you own a home but don’t have a will, you would do well to create one at your earliest convenience. This gives you protection and ensures that your wishes are met in the event that you pass away. Sole Ownership As its name implies, a single owner owns all rights, interest, and title to the home. Moreover, a married person can hold the title as “sole and separate” from their spouse. This means that the spouse can’t lay claim to the property in any fashion. When the sole owner dies in a situation like this, the home goes to their heirs or whoever is listed in their living will. Living Trust Real estate can also be held in a trust. However, there are typically additional requirements involved if a mortgage needs to be taken out. What usually happens in this instance is the trust will detail what happens to the interest in the home if one of the trustors passes away. Lenders want to know that the trust doesn’t have any provisions that could ultimately affect their ability to collect payments on the mortgage. That’s why having a living trust is the safest and most effective way to clearly state your intentions for what should happen to your property if something happens to you and you pass away. Your title holding may very well give some indication of your wishes. But having a living trust enables you to definitively provide specific details to avoid any possible confusion. In doing so, your heirs won’t be misinformed as to what happens to your home after you’re gone.
The way you choose to hold your title will ensure that there is a clear direction for what happens to your property after you pass away. By doing this, you can help avoid any unnecessary court involvement or decisions. Furthermore, you can help to avoid potential disputes between family members and heirs. By laying out direct orders for your wishes, you can: Guide who gets to profit from your home and what happens to it. If you want the home to be sold and the money divided up amongst family, you will need to make sure that you choose the correct title holding method in advance. You can also help determine who gets your property. Maybe you want grandchildren or a spouse to take ownership of your home. This also includes any tax benefits associated with your property. Although typically only related to tenants in common, you need to be clear in your wishes and choose the appropriate title vesting method to ensure your wishes are met. What’s more, you can effectively prevent probate, as outlined above. If there are no living owners of the property, there’s always the possibility of the courts stepping in. As such, you need to make sure that you add heirs who can take ownership without the need for courts to get involved. When it comes to ownership of your property, title vesting is your best course of action to ensure the best outcome.
Remember, if you are unsure what your best title holding option is based on your situation and needs, be sure to speak with a trusted real estate attorney in your area. They will be able to guide you through the process and help you make the right call for the future of your property. If you are interested in learning other real estate tips or need help securing a loan, we encourage you to explore the rest of our detailed blogs . You will find a wealth of information that can help you make the best decisions for your financial future. If you have any questions in the meantime, please feel free to contact us any time. Our specialists are always here to assist you. We can help you with your loan needs while ensuring that you get the best terms and rates. We have helped thousands of people just like you get the funding needed to succeed. We look forward to serving you and hope to hear from you soon. Sources https://www.nolo.com/legal-encyclopedia/marriage-property-ownership-who-owns-what-29841.html https://www.reonomy.com/blog/post/types-of-property-ownership https://www.daveramsey.com/blog/what-is-a-living-trust