What is a real estate title? In simple terms, a real estate title is a document that lists the legal owner of a piece of real property. As simple as that sounds, there are different ways of holding title to real estate. Depending on the circumstances, different types of titles can indicate varying levels of rights and obligations.
Read on to learn about five different types of titles and what they mean for real estate ownership.
A sole ownership title is probably the most straightforward type of title. This type of title lists one individual or entity as the property owner. The most common use for sole ownership titles is for private individuals who own homes. Beyond that, they are also common for businesses that own real property.
This type of title covers joint ownership by two or more people with equal rights to the real estate. If one of the owners dies, the rights to the property pass to the remaining owners. A joint tenancy makes it easy for the surviving owner to maintain control of the property.
A tenancy in common is a title for when two or more people hold equal or unequal shares of ownership. For example, one person might hold a 60% stake in the property while the other holds 40%. However, the owners share the rights to access the property equally. An unequal division of ownership is strictly financial.
A tenancy by entirety can only apply to a married couple. The purpose of a tenancy by entirety is to treat the married couple as one entity for legal purposes. This type of title indicates the couple as legal owners as if they are a sole individual. Upon the death of one member of the couple, the title transfers to the surviving spouse.
Community property is another type of ownership that applies to spouses. The idea is that spouses share property ownership and financial obligations equally. They both have equal rights regardless of who earns the money or bought the property. Only a handful of states have laws for community property.
The laws concerning different types of titles can be complicated. Buyers and sellers need to understand the rights and obligations of different ownership structures.
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