Introduction to Co-Ownership
When a property is co-owned with someone not your spouse, you have two options for ownership. This decision will determine the fate of the property upon your death and may influence other rights.
A question from Marjorie highlights the importance of understanding these options: "I am buying a vacation home with one of my children, and we will take turns using it and split the cost and expenses. We want to make sure that if something happens to me, she does not have to split the house with her siblings, whom I made other arrangements for in my will. What can we do?"
Understanding Tenants in Common
The most prevalent method of co-ownership is known as “tenants in common.” This is the default way of owning property with others, where each owner holds their share completely. If one owner passes away, their portion will go to their heirs, who will take their place as co-owners. This means that if Marjorie passes away, her share of the property could potentially go to her other children, unless specified otherwise in her will or through other legal arrangements.
Joint Tenants with Right of Survivorship
Conversely, if the property is owned as “joint tenants with right of survivorship,” and one owner dies, the remaining owners retain ownership, effectively inheriting the deceased owner’s rights. To own property this way, including the phrase “joint tenants with right of survivorship” on the deed is essential. If you don’t see those words on your deed, that means the property is owned as tenants in common.
Flexibility and Changes in Ownership
Any joint tenant has the right to deed their share of the property to anyone they choose. However, if a joint tenant transfers their portion to someone not already named on the deed, all owners will become tenants in common. This means the survivorship feature would no longer apply. This feature could become important should you want to change who gets your share of the property when you pass away.
The Importance of a Co-Ownership Agreement
Whenever people who are not married to each other, including parents and children, own property together, it is recommended to enter into a written “co-ownership agreement.” This type of contract will lay out each person’s rights and responsibilities and what will happen if one of you wants to sell the property while the other does not. Not only will taking the time to think these issues through in advance help avoid disputes, but the agreement will also make resolving any dispute that could not be avoided easier and less expensive to resolve.
Conclusion
In conclusion, understanding the options for co-ownership and taking steps to clarify the rights and responsibilities of each owner can help prevent disputes and ensure that the property is handled according to your wishes after you pass away. By considering the options for joint ownership and drafting a co-ownership agreement, you can protect your interests and those of your loved ones.
FAQs
- Q: What happens to my share of the property if I die and it’s owned as tenants in common?
- A: Your share will go to your heirs, who will then become co-owners of the property.
- Q: How can I ensure my child inherits my share of the property without it going to their siblings?
- A: You can specify this in your will or consider owning the property as joint tenants with right of survivorship.
- Q: What is a co-ownership agreement, and why is it important?
- A: A co-ownership agreement is a contract that outlines the rights and responsibilities of each owner. It’s important because it can help prevent disputes and make resolving any issues that arise less complicated and less expensive.
- Q: Can I change who inherits my share of the property after it’s been set up as joint tenants with right of survivorship?
- A: Yes, but if you transfer your share to someone not already on the deed, the ownership will revert to tenants in common, and the survivorship feature will no longer apply.
