When purchasing real estate with a friend, relative or spouse, one question you should ask is “how should we hold title?” There are three ways that individuals can jointly hold real property in the Commonwealth of Virginia: 1) Tenants in Common; 2) Joint Tenants; and 3) Tenants by the Entirety. These tenancies are delineated in the deed which gives you title to the real property. Each has specific consequences affecting your estate if you die and affecting you during your lifetime.
When multiple owners hold property as tenants in common, each owner’s interest passes upon death to her heirs/beneficiaries. If the owner died with a will (testate), her share passes to those designated in the will. If the owner died without a will (intestate), her interest passes according to the Virginia Code which provides rules for intestate succession. This type of tenancy is often utilized by individuals who are not married or related. Each tenant in common has the right to sell her interest without approval of the other owner. The law presumes a tenancy in common of equal ownership unless your deed specifies otherwise.
A tenancy by the entirety is only possible when the joint owners of the property are husband and wife. In the event of death of either party, the property transfers entirely to the surviving spouse automatically by operation of law. Each owner may not transfer his or her interest in the property without the consent of the other. In addition, a creditor who holds a judgment against one spouse cannot collect on the judgment utilizing property held as a tenancy by the entirety. In the event of a divorce, the tenancy by the entirety converts to tenants in common.
A joint tenancy is similar to the tenancy by the entirety in that if one owner dies, the property automatically passes to the surviving owner by operation of law. However, joint tenants are not married and are therefore not treated as one legal entity. They do not enjoy the same protection from creditors that a tenancy by the entirety provides. In addition, one owner may petition the Court to force the division or sale of the property.
Joint ownership agreements are beneficial where property is owned by joint tenants and tenants in common. These agreements define ownership interest in the property as well as the division of profits, expenses, tax benefits and other responsibilities of the owners. These agreements often save substantial expense in the event of a subsequent dispute.
For more information about joint ownership and other property issues, please contact an experienced attorney at the law firm of Paulson & Paulson, PLC.