From tax benefits to liability traps, each type of commercial real estate property has unique pros and cons, so it`s important to fully understand each before acquiring a new real estate asset. Buying and selling real estate with a partner can be a cost-effective way to invest your money. But too often, people find themselves in chaotic situations when it comes to deeds and property. Whether you are preparing to buy your next property or dealing with an existing deed, you will need an experienced real estate lawyer by your side. At BB&C, we help people determine what type of property is best for their situation, and we set ourselves aside in property and deed disputes. Contact Cecelia Neihouser Harper at 765-637-9175 if we can help. Joint tenancy: If the title to the property is based on the concept of unity and grants each co-owner an equal share of the property, the property is called a colocation. Even though fees are becoming more common, it is still a good idea to use explicit wording in the deed or will that the land will be transferred “to [the owner`s name] and his heirs.” This formulation – “to his heirs” – ensures that property is transferred as mere property. Owning the property as a sole proprietor has many advantages.
However, it is important to remember that if you are married and live in a state of communal ownership, property acquired during the marriage is also considered your spouse`s property. The courts divide this property between the spouses after divorce, unless one of the spouses loses his or her 50% share. Corporations are separate legal entities that may also own a real estate asset, as in the case of an owning corporation. For probate purposes, the deceased`s share of the joint property is included in the estate. If a stock portfolio is valued at $500,000, $250,000 will be included in the deceased spouse`s estate, although some states (such as California) have different rules. This means that a candidate has no say in the sale and distribution of the property. Real estate buyers should therefore ensure that the seller is not a nominee but a beneficial owner before entering into transactions in order to avoid legal complications in the future. Owners have several distinct advantages when holding title as sole proprietors. Property in a person`s name gives them exclusive discretion to decide when the property is sold, what to do with the property, and how the property is to be transferred to someone else. Exclusive ownership is simply less complicated because the person holding the title is responsible. The division or disposition of property is ultimately determined by the owner`s will, provided that the owner dies of testamentary (with will) and not intestate (without a will).
In a partnership, both partners are usually responsible for debts that the other partner has accumulated. In an LLC, this is not the case. If one owner of the LLC accumulates debts, the other owner is not responsible for those debts. For this reason alone, many homeowners choose the path of forming an LLC. Finally, the roommates are responsible for their share of the costs of maintenance and repair of the property. However, the legitimate co-owners of a property may demand that the economic interest deviates from the legal interest, in particular if they wish one of the partners to be entitled to a higher share of the rental income. For example, if A and B are the legal co-owners of a property, they may decide that A has an economic interest in 70% of the property and B has an economic interest in 30% of the property. This entitles A to 70% of the rent, while B is entitled to 30%. Since there is no right to survive with roommates, any property held by a person will be diminished after the person`s death.
The fact that the owner has “will” control over the property means that the owner can choose how the property is to be managed according to the owner`s wishes. Common tenants – or tenant in common – is a legal agreement in which two or more people come together to form a partnership to share ownership rights over real estate. The legal owners of a property are registered in the Land Registry and can be searched on the Land Registry website. The rights of the bereaved prevail. In this case, the will would be ignored and the property would be given to the remaining person in a tenancy joint with the rights of survivors, tenants in full or if you do, however, you need to understand the tax liability you are creating. If you own property individually, but completely change the title to rent, you are effectively giving your spouse a gift. You are responsible for donation tax on half of the value of the property. The beneficiary of the real estate interest receives a high base for this part of the property. It is important to remember that the beneficiary can be chosen by the deceased – unlike roommates (and JTWROS), where the surviving roommate(s) automatically inherit the deceased`s interests. As a spouse, it is not necessary to draft a survivor clause.
Do you own a property? What type of property is it under? In States of joint property, all property acquired by marriage is considered by the courts as 50/50 property of both spouses. However, property acquired before marriage is considered separate, which means that the sole proprietor does not have to share the property with one of the spouses in the event of divorce. In states that do not recognize joint property upon divorce, the likelihood that the property of only one spouse will have to be divided is even lower. In the case of sole and joint ownership of individuals, prospective owners should consider how their title should or could be transferred, either by sale or in the event of death, before choosing one method over another. As with sole ownership, a person who owns property jointly by lease has full will control over their share of the property. At the same time, however, the individual has the right to fully enjoy all aspects of property. A title is not a document. It is only an intangible set of rights relating to “immovable property”.
Arizona State Legislature “33-431. subsidies and subsidies to two or more persons; shared lands; co-ownership with survivors` rights; Roommates with the right to survive. Retrieved 18 March 2020. Colocation occurs when two or more people share equal and undivided property rights. Colocation is not limited to spouses – everyone can share common interests, but there is a tax advantage if this agreement is shared only between husband and wife (qualified roommate). If an asset belongs to the spouses, the value of the deceased spouse`s property passes to the surviving spouse without inheritance and without tax consequences. This is similar to the Survivor Rights Colocation (JTWROS) process. John and Michael buy the land and own it equally. After many years, John died. Because of the right to survive, John`s land goes directly to Michael, the surviving owner. Michael then fully owns the land as sole proprietorship.
If married individuals wish to own real estate outside of their spouse, title insurance policies generally require the spouse to expressly relinquish ownership of the property. As with the entire tenancy, co-ownership can allow the estate of a deceased person to avoid the estate and transfer it entirely to the surviving spouse. Only property that is not in possession of the joint property – including property that the deceased may have owned before the marriage – is included in the estate of the deceased owner and included in the probate process. Joint tenancy law: If two or more people jointly own property without equal rights, joint ownership is called co-ownership. If you want to acquire commercial real estate, it is always advisable to contact a lawyer who not only specializes in real estate, but also practices in the state where the property is located. Generally, the most important aspect of exclusive ownership is that the owner has full control over the property during his or her lifetime. There are no restrictions on what the owner can do with the property, how they can dispose of it or to whom they want to give the asset. In addition, each tenant must agree to the sale or transfer of the property, which can be very restrictive. In addition, a joint lease does not offer equality of use, rights or income, while a joint lease grants equal shares to all owners.
Currently, 10 states have communal property laws: Alaska, Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington, and Wisconsin. The greatest appeal of exclusive ownership is that decisions about the property, such as how best to use it or when to sell it, do not have to be approved by tenants or parties other than the owner. As you`ll see in the following sections, this is not the case with real estate ownership scenarios such as colocation and rental law. Think of simple property as a general framework of rights. Fifee simple gives you complete ownership and control over real estate, and you may have certain types of ownership (sole ownership, colocation, co-ownership) in fee simple.