Just a few words on a deed may seem inconsequential, but where two or more individuals own title to real property, it is important to understand the multiple forms of ownership that are available, and unavailable, to property owners.

Whether it is residential real property, a condominium, or a cooperative apartment, the form of ownership, or rather “tenancy”, can determine to whom or how the property is transferred in the future.

The three forms of tenancy are (1) Tenancy in Common; (2) Joint Tenancy with Rights of Survivorship; and (3) Tenancy by the Entirety.  Each type of tenancy is distinguishable from the others by the rights they convey to the co-owners of the real property.

Tenancy in Common

Tenancy in Common provides each party a concurrent, or simultaneous, undivided ownership interest in the real property.  Thus, each party has the unalienable right to transfer or sell their ownership interest in the real property during their lifetime or by means of a Last Will and Testament.  Among the three forms of ownership, Tenancy in Common allows a property owner the greatest flexibility with regard to their ownership interest.

Each party can sever their relationship with the other owners by conveying their undivided interest to another party (or even a trust), who then becomes a tenant in common with the other owners.  Furthermore, it is not required that each party owns an equal ownership interest in the property.

Rather, each party can own a different percentage of the real property, such as two owners each with an undivided ownership interest of 40% and a third owner with an undivided ownership interest of 20%.  Additionally, each tenant in common may acquire their interests in the real property via separate instruments. Where the form of tenancy is silent on the instrument, the ownership interest is presumed to be a Tenancy in Common.

Joint Tenancy with Rights of Survivorship

Joint Tenancy with Rights of Survivorship (“JTWROS”), by contrast, requires that all co-owners maintain an equal share of the real property.  Furthermore, when a “Joint Tenant” passes away, their undivided ownership interest ceases to exist and the other Joint Tenants automatically receive the deceased Joint Tenant’s interest in equal shares.

For example, if John, June and Joan own the property as JTWROS, and John dies, June and Joan will then automatically own the property equally.  Unlike Tenancy in Common, the execution and recording of a deed is not required to effectuate the transfer of a deceased Joint Tenant’s undivided ownership interest to the other Joint Tenants.

Thus, a benefit of JTWROS is that it avoids the need to probate a deceased co-owner’s Last Will and Testament.  A Joint Tenant may transfer or sell their undivided ownership interest without the approval of the other Joint Tenants, but by doing so they sever their ownership interest from the “Rights of Survivorship” and said interest becomes a Tenancy in Common.

However, the other Joint Tenants still maintain their interests with “Rights of Survivorship” with all owners.

Tenancy by the Entirety

Tenancy by the Entirety is a form of Joint Tenancy only available to married or civilly united couples.  Where a married couple owns real property as Tenants by the Entirety, one spouse cannot transfer their undivided ownership interest without the prior consent of the other spouse.

Similarly, upon the death of one spouse, his or her undivided ownership interest automatically transfers to the other spouse, thus acquiring full ownership of the real property. Creditors of a spouse may place a lien on the real property held by Tenancy by the Entirety, but if the debtor spouse passes away prior to the other spouse, the surviving spouse will take full ownership of the real property free and clear of the lien.

This benefit is specific to Tenancy by the Entirety, as a Creditor’s lien follows the debtor owner’s share in the other forms of tenancy.  Tenancy by the Entirety is not automatically conveyed to married couples.  As such, where a couple purchases property and subsequently marry, the form of ownership of the real property must be re-titled via deed.

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