How should you take title when you buy a new home?

On Behalf of | Nov 11, 2020 | Real Estate |

When you decide to make an offer on a house, there are many considerations. When do you need to take tenancy of the property, what upgrades are critical to make before you move in and how you intend to fund the purchase are all major decisions.

You also have to decide what insurance company to go with, how to use each of the rooms in the house and what you want to do for landscaping. You will probably focus on those aesthetic and comfort-based decisions more than you will on the most critical legal issues related to buying a new property.

One of the most important decisions you will make is something you probably haven’t even considered. How you hold title affects not just your rights and the rights of other owners and tenants in the property but also the rights of your loved ones when you die. What are your options for holding title when buying a new home?

Sole or joint fee simple title is common

Many people who own their home outright, as well as married couples, simply hold title by having their names added to the deed for the property. This form of title is the simplest and most straightforward, but that doesn’t mean it’s the best option for everyone.

You can hold title as tenants in common

When you hold title as tenants in common, you acknowledge that you have unequal ownership of the property, and each of your ownership interests remains separate. Maybe only one of you contributed to the down payment, or you both sold your prior homes to purchase this one together.

As tenants in common, you have documentation regarding the unequal ownership and the right to take action with your individual share of ownership at any time. That means you can leave your percentage of the equity to someone else in your estate plan or even sell or refinance your portion of the property.

People worried about mortality may want to be joint tenants

If you believe that you and your spouse will live in the house until one of you dies, then you need to think about what the death of one owner means for the tenants and other owners of the property. When you take title as joint tenants with rights of survivorship, the ownership interest of either owner passes to the other tenant when one owner dies.

Everything from your house, age and family size to your marital status can influence the best way to hold title when you purchase a new property. Instead of just reverting to the most basic language possible, you may want to speak with a lawyer in order to make an informed decision that offers you optimal protection for your needs.