When setting up a title for a property, there are several ways you can configure possession of real estate. One of the more interesting ones is joint tenancy, an arrangement frequently used by business partners, family members, and some unmarried domestic partners. There are, however, a few things you ought to know about joint tenancy before you decide to set up a title in this manner.
1. Everything Is Evenly Split
Regardless of how many people or organizations that are parties to a title, everyone will have an even split. This means they have even stakes and responsibilities. If there are maintenance costs or taxes, everyone needs to pay them.
Legally speaking, there are a lot of problems to split between two or more people. If you intend to set up a joint tenancy, it's wise to retain the services of a real estate law firm in drafting the agreements governing it. This way, all of the responsibilities will be made clear and enforcement mechanisms will be put in place.
2. Transfer Upon Death
When a joint tenant dies, their stake in the title goes to all of the other tenants. For example, a joint tenancy of three people would simply become one involving just two people once one of them dies. Over a long enough timeline, the last survivor would become the full owner.
The only exception to this structure is if the two parties were married at the time the real estate was acquired. In that scenario, each stake would be handled according to the state's laws regarding community property.
It is possible to opt for a tenancy in common if you want your stake to be transferable upon your passing. Presuming everything in your will is in order, your ownership stake would become the property of your heirs. A real estate lawyer can ensure you know will happen to your share of the property when you pass away.
3. Everyone Gets a Say
Suppose you want to collateralize a property that's held in a joint tenancy. All parties to the tenancy will have to sign off on the financing agreement before any action can be taken. This can work very well with two or three business partners involved. On the other hand, it gets a little unstable as the number of tenants grows.
If you're planning to invest in a property with many people, you may want to consult with an attorney from a real estate law firm to consider other vehicles. For example, a trust might be set up to empower one person to make decisions.Share