How Should I Own My Property? Title Options Explained
.
Different Tenancies Explained
When purchasing or receiving a property, you must make a decision about what capacity you are holding title. Below is an explanation of the different legal tenancies.
Sole Owner
If you are the only owner, or if your company, estate, or trust is the only owner, then you elect “sole owner.” You will have the power to convey the property however you wish, including through your estate plan or business succession plan. If you do not have an estate plan or business succession plan, it will pass to the person(s) or entities under the default laws of your jurisdiction.
Tenants in Common (TIC)
If more than one person will own the property, divided into specific shares (for instance, 60/40 or 25/25/50), the correct choice is tenants in common. All owners have the right to the use and enjoyment of the entire property, but they can sell or convey their interest separately without the consent or approval of the remaining tenants. Additionally, when one tenant passes away, their share will be inherited by their heirs, beneficiaries, or descendants. If there is no specific designation on a deed, the law defaults all multiple-owner tenancies to a tenancy in common.
What happens if tenants in common disagree about the use of a property?
Example: Clarence and Jackie invest in a piece of river-front land together. Clarence wants to have a small cabin by the stream to fish out of, and they agree to build one. Jackie later wants to expand this into a very large house with outbuildings, and Clarence objects.
Because both tenants have the right to use and enjoyment of the whole property, either can proceed. Jackie can hire contractors and begin work. Jackie can also show up and be a nuisance, scaring all of the fish away on a regular basis. Clarence can sabotage construction, or seek an injunction.
What is the resolution of such a matter? They would likely need to agree to divide the parcel, or go to court to get a court ruling, and possible partition of interest. If the Court cannot order a partition of interest based upon the particular parcel (Jackie gets the south half, Clarence gets the north half, for example), the court will order the parcel sold and the proceeds divided.
Joint Tenants (With or Without Right of Survivorship / “JTWROS”)
When two or more people own a property and they have equal shares, they are joint tenants. Joint tenants each hold an equal, undivided interest in the whole (for instance, 50/50, 33.3/33.3/33.3, or 25/25/25/25) and have an unrestricted right to enter, use, and enjoy the property.
Importantly, when one of the tenants passes away, the surviving tenant(s) then become the owner of the property. This means that your share will not pass to your heirs, beneficiaries, or descendants, but instead passes to the joint tenant(s) by operation of law.
Example: John and Jim own a property as JTWROS, each owning 50%. When John passes away, the entire property is owned by Jim, who may convey it or pass it down to his heirs.
Mary, Carla, and Denise own a property as JTWROS. When Mary passes, the property is owned 50/50 by Carla and Denise. When Denise passes, Carla owns 100% of the property and may convey it or pass it down to her heirs.
Common Questions
Can you sell your share of a JTWROS property? Yes, but doing so will convert the tenancy to a tenancy in common.
What happens if joint tenants disagree about the use of a property? Such disputes usually result in a conversion to a tenancy in common and possible division of interest or partition.
Virginia law now requires that a joint tenancy with survivorship be specifically designated on a deed. Otherwise, there is no survivorship provision, and transferability acts as if the owners are tenants in common.
Tenancy by the Entirety (TBE)
This is a joint tenancy only available to people who are married to each other. The important aspects are that it automatically transfers the property to a surviving spouse in the event of an untimely death, and it protects the property from individual creditors (though not necessarily from joint creditors). It is recommended for married couples.
Example: Erick and Rosemary, a married couple, purchase a house while they are married and hold title as tenants by the entirety. Erick is a sole proprietor of a business, is sued, and loses the case. The plaintiff places a lien on all of his property to collect on the judgment. This lien will not attach to the house, which the couple owns as tenants by the entirety. Rosemary and Erick can sell the house and purchase another home later without worrying that the proceeds will be consumed at closing by the outstanding lien.
Common Questions
Can a tenant by the entirety sell their portion? No.
What happens when one tenant by the entirety passes away? The surviving spouse owns the entire property.
What happens if the spouses divorce? The tenancy by the entirety is converted to a tenancy in common by operation of law.
Why Might Spouses Not Wish to Hold Title as Tenants by the Entirety? In certain situations, spouses may prefer a different form of ownership based on estate planning, business considerations, or creditor exposure. Legal guidance is recommended when making this decision.
State Law References (Virginia, Maryland, and D.C.)
Tenants in Common (TIC): Virginia: Va. Code § 55.1-135, Maryland: MD Code, Real Property § 2-117, Washington, D.C.: D.C. Code § 42-516. In each jurisdiction, tenancy in common is the default form of co-ownership unless a deed expressly creates a joint tenancy or tenancy by the entirety.
Joint Tenants (With or Without Right of Survivorship / “JTWROS”): Virginia: Va. Code § 55.1-135, Maryland: MD Code, Real Property § 2-117, Washington, D.C.: D.C. Code § 42-516. Each jurisdiction requires that joint tenancy—and any right of survivorship—be expressly stated in the deed. Without clear survivorship language, ownership is generally treated as a tenancy in common.
Tenancy by the Entirety (TBE): Virginia: Va. Code § 55.1-136, Maryland: MD Code, Real Property § 4-108, Washington, D.C.: D.C. Code § 42-516. Tenancy by the entirety is available only to married couples (and, in some jurisdictions, legally recognized domestic partners) and provides survivorship rights and protection from certain individual creditors.
