For most people, buying a home is the most significant purchase of their lives. If you are purchasing property together with another person, then one issue to consider is how you and the other parties (as the buyers) want to take title to the property. How do you want to own the property? The manner in which a purchaser takes title to property can have significant consequences depending on the situation whether that be the death of one of the owners or the souring of a personal or business relationship.

Three Ways to Own Property

Generally, title agents will ask you how you want to take title or will provide a form for you to fill out indicating how you want to take title. If you are buying property by yourself, then the options are straight-forward because as the buyer, you are going to take title as either “a single man” or “a single woman” or “a married man” or “a married woman.” However, what happens when a buyer is purchasing property with someone else and what are the ways buyers can take title jointly? More often than not, buyers purchasing property jointly take title one of three ways: tenants-in-common (“TIC”), joint tenants with full rights of survivorship (“JTWROS”), or tenant by the entireties (“TBE”). Other options to consider may be forming a corporation, limited liability company, or trust to take title, but those options are not being covered by this post.

Tenants in Common

In Florida, the default rule is tenants in common. For purchasers of property, this means that if you are unmarried and buy a piece of property with another person, you are most likely taking title as tenants in common if you do not state a preference otherwise. Typical examples of this might be if you are purchasing property with a business partner or you are purchasing property with a significant other and are unmarried. In the event of the death of one of the owners, property held TIC passes to the heirs of the deceased owner. For example, if John Smith owns property with his brother Mike Smith as tenants-in-common, and Mike dies, then Mike’s one-half interest would pass under his will or, if no will, under Florida’s intestacy statute.

Joint Tenants with Full Rights of Survivorship

Another way to take title jointly is as joint tenants with full rights of survivorship. To own property as JTWROS, the buyers need:

  • unity of possession (joint ownership and control)
  • unity of interest (the parties’ interests are identical)
  • unity of title (the interests originated in the same instrument)
  • unity of time (the interests commenced simultaneously)

When two or more people take title as JTWROS, this means that the last survivor takes full ownership upon the death of the other owners. For example, if Mother and Son purchase a home as JTWROS, and the Son predeceases his Mother, then Mother would take 100 percent ownership automatically upon her Son’s death. That is, Mom would take 100 percent ownership of the property without going through the probate process. While many estate planners use this form of ownership to eliminate the need to probate certain assets, this can have detrimental effects depending on the intention of the parties. For example, if two business partners take title as JTWROS and one of them dies, then the surviving partner takes full ownership of the property. If the deceased partner wanted his/her interest to go to his/her heirs, then this asset would never become a part of the deceased partner’s estate.

Tenants by the Entireties

The third way in which to take title is as tenants by the entireties. This form of ownership is reserved only for married couples. At the time of the purchase, the buyers need to:

  • have unity of possession (joint ownership and control)
  • have unity of interest (the parties’ interests are identical)
  • have unity of title (the interests originated in the same instrument)
  • unity of time (the interests commenced simultaneously)
  • unity of marriage (the parties were married at the time the property became titled in their joint names).

When a married couple purchases a home, this is most often signified on the deed with the words “husband and wife,” “a married couple,” “husband and husband,” etc. This form of ownership has the same effect as owning property as JTWROS (i.e., the surviving spouse takes full ownership of the property) with the added benefit of certain creditor protections.

It is important to note that if the married couple gets divorced and still owns the home together after the divorce, their ownership is automatically converted from TBE to TIC because they would fail to meet the fifth requirement to hold property TBE (the marriage requirement).

If the divorced couple decides to get married again, then the subsequent re-marriage would not change how title is held back to TBE from TIC. Instead, the re-married couple would need to re-execute a deed from themselves, TIC, to themselves, TBE. For example, Husband and Wife, tenants-in-common, as Grantor, to themselves as Husband and Wife, tenants by the entireties.

Take-Away

There are many factors to consider when considering how you want to take title to property and the consequences can be significant. Accordingly, it is important to understand your options to discuss your intentions with an attorney. If you have any questions or need assistance, please feel free to contact me at caleb.hinton@henlaw.com or by phone at 239-344-1125.