WHO OWNS THIS
PROPERTY? WHAT DOES IT MEAN?
An
essential element of every real estate transaction is
deciding how the property will be titled. Who are the
owners? What are their rights, duties, obligations,
liabilities, or limitations? In the excitement of the
purchase of property, buyers should not forget to
consider these issues. Many varying personal factors make
it impossible to have a standard answer, but how title to
property will be held is no small decision. One's marital
status, homestead or non-homestead nature of the
property, second marriages, minor children, children of
two households combined, estate tax and property
management decisions, contributions made, potential
creditor claims and possession of the property are all
factors to be considered prior to sitting down at the
closing table.
Over the years, I have questioned buyers many times
regarding some or all of these issues when on the surface
it appears that they have not considered these issues or
I sense that they may not fully understand the
significance of titling of the property.
The following considers the purchase of residential
property by two people. It is intended to make the reader
mindful of titling decisions, not to try and provide a
"standard answer".
Under Florida Law, there are three general forms of
concurrent ownership. Concurrent ownership is the owning
of property with another. Possible choices of concurrent
ownership are "tenants in common", "joint
tenants", and "tenancy by the entireties".
Tenants in Common
If two or more purchasing property chose to take title as
tenants in common, each individual owns an undivided
interest in the entire property. Each owner could sell
their undivided interest in the property. However, both
owners must agree to sell the whole property.
As a practical matter, owning an undivided interest in
residential property, and trying to sell the undivided
interest would prove difficult. Mortgaging one's
undivided interest for practical purposes is almost
impossible.
As tenants in common, each owner has the right to
possession and enjoyment of all the property, not just
their undivided portion and is not obligated to pay the
other for the right. Consider for example what would
happen if roommates bought property together, then have a
falling out and cannot live under the same roof.
As tenants in common, there is no right of survivorship.
When one owner dies, his interest passes as he wishes to
his devisees or his heirs. The absence of the right of
survivorship is the principal distinction between a
tenants in common and a joint tenancy.
Under Florida Law, tenants in common is favored. Unless a
joint tenancy is expressly indicated, when a conveyance
is made to two or more persons, they are presumed to take
as tenants in common and not as joint tenants.
A common misconception is that tenants in common means
equal shares. Without a designation, a tenancy in common
is presumed to create ownership in equal shares, but
equal shares are not required. The co-tenants can own
different percentages.
Joint Tenancy
Joint tenancy is short for "joint tenants with right
of survivorship". A joint tenancy is a form of
concurrent ownership wherein two or more own property
together, and the surviving co-owner has the right to the
whole property upon the death of all the co-owners.
The right of survivorship is the most important feature
of a joint tenancy. On the death of a joint tenant, his
interest ceases, and the property is owned entirely by
the surviving tenant. Because of this feature, a joint
tenant cannot devise or leave his interest to another
upon his death.
A joint tenancy with right of survivorship is recognized
under Florida Law provided the instrument creating the
joint tenancy expressly provides for the right of
survivorship. The customary language is "as joint
tenants with right of survivorship". Without the
magical language, a tenants in common would be created.
Therefore, if a right of survivorship is desired, it must
be expressly provided for.
A joint tenant without the consent of the other joint
tenant may terminate the joint tenancy by a conveyance of
his interest in the property. This conveyance can be made
to himself, thus retaining an undivided 1/2 interest as a
tenant in common, or may be made by conveyance to a third
party who then becomes a tenant in common. Therefore,
even though one may initially desire to own property with
another and to have their interest pass to the other co-owner,
should that desire change, they can, without the consent
of the other, sever the survivorship right, become a
tenant in common, and then ultimately devise or leave his
or her interest in the property to the typical married
couples form of ownership. It is similar to a joint
tenancy, but there is the requirement that the two joint
tenants be married at the time they acquire the property.
Generally, it is preferable to recite language indicating
that the couple is married, such as "husband and
wife" or "his wife" or "her husband"
following the names of the parties. However, such a
designation is not required. There is a presumption that
a married couple acquiring property together will acquire
that property as tenants by the entireties unless another
intention is expressly indicated. Therefore, if a married
couple desires to acquire title as tenants in common they
must expressly state so. As with a joint tenancy, on the
death of one of the spouses, the surviving spouse is the
sole owner of the property.
Tenancy by the Entireties
Tenants by the entireties is an ownership of the
whole with one's spouse - not an ownership of an
undivided interest. Therefore, one spouse cannot sever
the tenancy by the entireties without the consent and
joinder of the other. Any conveyance or mortgage of the
property would require both spouses. This requirement has
been interpreted to require that both spouses even sign,
have witnessed, and acknowledge the same document.
Upon dissolution of marriage, a tenants by the entireties
terminates and the former spouses become owners of the
property as tenants in common, each owning an undivided 1/2
interest in the property.
Summary
Before closing and acquiring title to property, buyers
should consider how they desire the property to be titled.
To make an informed decision, personal factors should be
considered as well as evaluating the three forms of
ownership. Sometimes in that evaluation it is difficult
if not impossible to find the ideal answer. However, an
informed and conscious decision, should be preferred.
CHRISTOPHER
J.
HURST,
P.A.
4776 Hodges
Boulevard, Suite 206
Jacksonville, Florida 32224
Telephone (904) 641-8401 - Fax (904) 645-0005
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