Buying a new home is exciting! You have likely looked and looked for months, trying to find the perfect house to call your “HOME.” You have a list of all your “must-haves” in a new home, and, finally, you stumble upon a house with beautiful oak trees, high ceilings, updated countertops, and a pool – it’s perfect for you and your family. But there’s one “must-have” that you likely haven’t considered yet: how are you going to take title once you close on the property? There are three options: Fee Simple Absolute, Joint Tenants, or Tenants in Common.
FEE SIMPLE ABSOLUTE – Owning a home individually without any limitations or conditions is termed as owning the property in “fee simple.” This is a common type of ownership for an individual purchasing or acquiring property. A deed that transfers property in fee simple is usually prepared using words like “to Sally Smith” or “to Sally Smith and her heirs.” This form of ownership is simple, but it is not the best option for all buyers.
JOINT TENANTS – If you own a piece of property as joint tenants, the property is owned totally by each owner and by all owners collectively. That means that when one owner passes away, their interest automatically transfers to the other owner(s). If there comes a time that the owners would like to sell the property, all of them must sign off. Titling property as joint tenants is a great way to avoid probate. You still need a will, however. The reason: When one joint owner dies, the surviving joint owner takes title automatically and becomes the sole owner. Then, when the last surviving owner dies, then state law will determine who inherits the property if there is no will. The biggest issues arise when the joint owners have children from previous marriages. A deed that transfers property as joint tenants is prepared using the following language: “to John Smith and wife, Sally Smith, as joint tenants with the right of survivorship and not as tenants in common.” In general, joint tenancy is recommended for married couples.
TENANTS IN COMMON – If you own a piece of property as tenants in common, you own a partial interest in the property with another individual or individuals, but there is not right of survivorship. Meaning that if you pass away, your interest in that property will then transfer to your heirs. Each tenant in common owns only a proportionate share of the property, and each tenant in common may sell or transfer that share without the consent of the other owner(s). A deed that transfers property as tenants in common is usually prepared using words like “to Sally Smith and John Smith” or “to Sally Smith or John Smith.” Holding title as tenants in common is the default in Mississippi. That means if the phrase “as joint tenants with full right of survivorship and not as tenants in common” is not on the deed, then it is automatically assumed by law that you hold title as tenants in common. For example, if you and your spouse hold title as tenants in common, you will not avoid probate if one or the other of you passes away. Instead, probate of your estate will be required in order to establish the heirs that will take partial title in the stead of the spouse that passed. In general, holding tenancy in common with a spouse is not recommended. Call or email us at Sullivan Law Firm, PLLC with your questions. Under contract to buy or sell a home, send us your contract and we will get started on the closing process.
* THIS POST IS IN NO WAY INTENDED TO GIVE LEGAL ADVICE OR CREATE AN ATTORNEY-CLIENT RELATIONSHIP. PLEASE CONTACT OUR OFFICE TO SET UP A CONSULTATION AND TO EXECUTE AN ENGAGEMENT AND FEE AGREEMENT.