Real property refers to the land and items that attach to it. A house would be considered real property. Real property ownership can have single or multiple owners. The owner can be a person, but the owners can also be a company, a trust, or another entity. No limitation exists on the number of people or entities owning a specific piece of real property.
Depending on your state, the laws can vary on real estate. You can research your local state laws through LegalMatch.com. For instance, Maryland requires joint owners to hold the title to real property. In Maryland, real estate is primarily governed by case law, which is the law found in judges’ opinions. It is crucial to understand the various distinctions and obligations for joint ownership.
What Is Joint Tenancy?
Joint tenancy is a form of joint ownership of real property which consists of two or more owners referred to as “joint tenants.” The joint tenants possess the right of undivided interest in the real property and the right of survivorship. Most common situations include married couples with their respective families. However, there is no requirement for marriage for joint tenancy. Each owner has an equal, undivided interest in the real property.
The right of survivorship states that when one joint tenant dies, that joint tenant’s undivided interest in the real property automatically transfers to the surviving joint tenant or tenants. Therefore, it is not subject to a will because the right of survivorship is excluded from a deceased person’s estate. But not all cases are the same, and there are exceptions to this rule.
To form a joint tenancy under the law, the language in the deed must be precise and clear. You can check your local state regulations for more clarity on this. Generally, this means that documents, such as deeds, must expressly disclose the intent that the real property is to be owned as a joint tenancy for it to be legally binding. If the required language is absent, ownership will be assumed to be a tenancy in common.
The formation of joint tenancy requires “four unities of interest” to be present. These four unities are considered the cornerstone of joint tenancy’s existence.
The following is a brief description of these unities:
- Unity of Time: The ownership interests must have vested at the same time means;
- Unity of Title: All owners’ interests must be acquired from the same deed;
- Unity of Interest: All owners have equal interests in the property and;
- Unity of Possession: All owners have the same and concurrent rights to possess the property.
The main takeaway is that the joint tenants share an equal interest in owning the entire property. All four units must be satisfied for the joint tenancy to be valid. Any tenant within the ownership can access all parts of the property without limitation or restriction. All joint tenants have the right to enter the property at any time.
What Are Ownership Rights?
Ownership rights have different variables depending on the rights and interests attached to them. Property ownership rights can have many forms. Most people tend to have co-ownership agreements because they are in a mutual relationship and want to live together. Each jurisdiction interprets how these forms of ownership rights come into play in times of conflict.
Also, each tenant has their rights and obligations when it comes to sharing the space. You can research more on this topic through LegalMatch.com.
What Are the Mortgage Requirements for Joint Tenants?
Besides wanting to live together to own a home, the couple must have some financial resources to fulfill the real estate mortgage market. Usually, anyone seeking to purchase a home applies for a loan with a bank.
The banks determine whether or not the application for the loan can be approved. Some things to consider for this are a high credit score and a debt-to-income ratio below 50%. Co-tenants applying through a joint tenancy can combine their income and debts to increase their chances of qualifying.
What Are the Benefits of Joint Tenancy?
There are several advantages when it comes to seeking property through joint tenancy. One of the most important benefits of it is that it can make homeownership more affordable. Joint tenancy permits the co-tenants to divide the down payment cost and provides them with an advantage when it comes to qualifying for a mortgage.
Joint tenancy ownership equally divides the responsibilities for maintaining the property. With co-tenancy, the parties are more likely to be incentivized to work towards their investment in the property. The equal interests in the property create a partnership between the parties and allow them to collaborate for their own goals.
Regardless of whether or not you had a will, you do not have to deal with the complex probate process. Joint tenancy includes the rights of survivorship, meaning the surviving co-tenant(s) has immediate access to their property shares regardless of whether the deceased owner has written out a will. Therefore, the hassle of dealing with the court on probating the will can be avoided.
What Are the Disadvantages of Joint Tenancy?
Although there are some benefits to having this type of co-ownership, there are some aspects of joint tenancy which can be considered drawbacks. For instance, being a co-owner can come with additional financial burdens and responsibilities.
If your other partner loses their job or runs into financial difficulties, you, the co-owner, need to step in and ensure that the mortgage payments are made on time and that the property does not default.
Moreover, there is added pressure on your relationship when the joint tenancy solely depends on the success of that relationship. Issues can arise if a change occurs in the relationship between joint tenants.
Navigating through disagreements in a co-ownership can easily become challenging. Remember that no one is permitted to sell the property or their shares without express authorization from the other co-tenants. Also, with the rights of survivorship, only the last living co-tenant can pass the asset onto their heirs.
Furthermore, there is no doubt that there will be issues if the couple decides to divorce or separate. Joint tenancy can add tension to legal battles, and each party will be held accountable for all debts related to the house. Joint tenancy gives the married couple property titles and equal interest in the property. As mentioned above, if the marriage dissolves, the couple will face issues with property division, which will change their interest in the property.
When Do I Need to Contact a Lawyer?
If you want to own some property and want to have a co-owner, there are some legal aspects you need to know about. Above is a summary of the legal issues of a joint tenancy. Besides that, joint tenancy can be useful in many situations.
Depending on your state and situation, you can contact a local property lawyer to understand your legal obligations when you are bonded in a joint property.
