You bought a new house – Congratulations! You’ve made it to your closing date, signed about 3,732 documents and the title company asks: “How would you like to take title?” Maybe you’re thinking “I don’t know. What do you mean by ‘take title’?” If there are multiple parties taking ownership of the property, the answer can have a significant impact on how the property is handled later. Generally, there are two types of ownership to choose from: Tenants in Common or Joint Tenants. The main difference between the two types of ownership is what happens to the property if one of the owners dies.
Tenants in Common – When property is owned by two or more people as Tenants in Common, each person’s interest will pass onto his or her heirs upon death. In order words, each Tenants in Common owner has an undivided share/ interest in the property and that interest could be sold by itself. Also, there is no right of survivorship. For example:
Uncle Joe has never been married and has no children. His favorite niece, Sally, helped him later in life, so he added Sally to the title of his Missouri house with the intent that Sally would own it when he dies. Unfortunately, the deed did not declare ownership as Joint Tenants. Title was as Tenants in Common; thus Sally inherited an undivided one-half interest in the property. NOTE: In the state of Kansas, tenancy in common is the default and is created unless the language on the deed makes it clear that a joint tenancy was intended.
Joint Tenancy – With joint tenancy, when one of the owners dies, the property is automatically owned by the remaining owner(s). The deed must contain the words “as joint tenants” or “as joint tenants with rights of survivorship” for that to be the case.
Tenancy by the Entireties – Missouri (and some other states, but not Kansas) has a special form of property ownership called Tenancy by the Entireties. This form of ownership means that a husband and wife own property as one person, and each of them owns a 100% interest in the property.
What Happens Upon Death? – When the owner(s) of real estate die, unless either a Beneficiary Deed or a Transfer on Death (T.O.D.) has been recorded in the county where the property is located, the property has to go through probate, even if there is a will in place. Also, titling real estate in a trust will avoid the probate of real estate.
By: Jessica L. Kimbrell, Attorney and Founding Member,
Assisting Clients in Missouri and Kansas with:
- Comprehensive Estate Plans Tailored to Each Client’s Unique Situation, Needs and Goals
- Powers of Attorney, Wills, Revocable Living Trusts
- Special Needs Trusts
- Asset Protection Trusts
- Heritage Trusts to Protect Your Beneficiary’s Inheritance from Creditors and Unforeseen Events