Common Forms of Property Ownership

Common forms of property ownership include the following:

Joint Tenancy: Property is owned by two or more persons at the same time in equal shares. Unity of time, title, interest, and possession is vested in each joint tenant (four unities). Each joint tenant has an undivided right to possess the whole property and a proportionate right of equal ownership interest. When one joint tenant dies, his/her interest automatically vests in the surviving joint tenant(s) by operation of law. Words in the deed such as “John and Mary, as joint tenants with right of survivorship and not as tenants in common”, establishes title in joint tenancy. Some states do not allow this form of property ownership.

Tenancy in the Entirety: Some states have a special form of joint tenancy when the joint tenants are husband and wife, with each owning a one-half interest. Neither spouse can sell the property without the consent of the other. Words in the deed such as “John and Mary, husband and wife as tenancy in the entirety”, establishes title in tenancy by the entireties.

Sole Ownership: Property is owned entirely by one person. Words in the deed such as “John, a single man”, establishes title as sole ownership.

Tenants in Common: Property is owned by two or more persons at the same time. The proportionate interests and right to possess and enjoy the property between the tenants in common need not be equal. Upon death, the decedent’ s interest passes to his/her heirs named in the will, who then become new tenants in common with the surviving tenants in common. None of the tenants in common automatically receives the share of the decedent. There is no right of survivorship as with joint tenants. The words in the deed such as “Peter, Paul, John and Mary as tenants in common”, establishes tenancy in common.

Community Property: In states that recognize community property, a special form of joint tenancy exists between husband and wife, with each owning a one-half interest. Upon death, the decedent’s interest passes in a manner similar to tenants in common. Words in the deed such as “John and Mary, husband and wife as community property”, establishes community property ownership.

The above ways for owning real property are all present interests and rights of the owner. Future interests can also exist, which come into effect in the future. Typically, future interests are based upon the occurrence of a contingency, such as someone dies and the decedent’s interest in the property passes in accordance with his/her last will or trust.

Case Studies: Common Forms of Property Ownership

Case Study 1: Joint Tenancy

In this case study, John and Mary purchase a property together as joint tenants with the right of survivorship. They each have an equal ownership interest and possess the property jointly.

Unfortunately, John passes away unexpectedly. As per the terms of their joint tenancy, Mary automatically inherits John’s interest in the property, becoming the sole owner.

Case Study 2: Tenancy in the Entirety

Another form of joint ownership is tenancy in the entirety, which is limited to married couples. In this case study, John and Mary, husband and wife, own a property as tenants in the entirety.

Both hold an equal one-half interest, and neither can sell the property without the consent of the other. This type of ownership offers additional protection for the property in the event of a divorce.

Case Study 3: Sole Ownership

In this case study, John purchases a property in his name alone, establishing sole ownership. As the sole owner, John has full control over the property and can make decisions regarding its use, sale, or transfer without the need for anyone else’s consent.

Case Study 4: Tenants in Common

Peter, Paul, John, and Mary decide to invest in a property together as tenants in common. Unlike joint tenancy, tenants in common can have unequal ownership interests and possess the property individually.

If any of the tenants in common pass away, their interest in the property will be passed to their heirs as per their will or trust, creating new tenants in common.

Case Study 5: Community Property

John and Mary, a married couple residing in a community property state, own a property as community property. Similar to tenancy in the entirety, each spouse has a one-half interest in the property.

If one spouse dies, the decedent’s interest passes according to their will or trust, similar to tenants in common.