Types of Home Ownership – Everything You Need To Know

By: ROS Team

There are multiple factors to consider when buying property, like the quality of nearby schools and the property’s location. But one important thing that buyers often overlook is how the property will be titled and who will it end up with should anything happen to them.

Whether you’re buying a residential property or commercial real estate, ownership equals legal rights to the property. Various issues may arise if your property has ownership defects; therefore, it’s important to know the different types of homeownership.

Types of Home Ownership

There are Eight Types of Real Estate Ownership:

1) Joint Tenancy
2) Joint Tenancy With Right of Survivorship
3) Trust Ownership
4) Tenancy in Common
5) Community Property
6) Sole Ownership
7) Partnership Owners
8) Tenants by Entirety

We’ll take a closer look at each type below.

1. Joint Tenancy

Joint tenancy occurs when there are multiple property holders. In this scenario, ownership is equally divided among the interested individuals. If one of the holders dies, the title is transferred to the surviving title holder through a legal document called the right of survivorship. It should be noted that the property responsibility in a joint tenancy is shared among all parties, and any financial loss related to the property belongs to everyone.

2. Joint Tenancy With Right of Survivorship

Joint tenancy with the right of survivorship is when joint tenants have undivided shares in the property and, upon the death of any joint owner, his/her shares are passed to the surviving partners. In this type of ownership, everyone shares equal responsibility which means that all the parties enjoy property profits and share losses equally.

3. Trust Ownership

A property can also be owned by a trust. When this is the case, a trust manages the property assets under the direction of the beneficiary of the trust. In case of the trustee’s death, the assets are then transformed to the designated heir(s).

4. Tenancy in Common

With tenancy in common ownership, multiple individuals jointly hold a real estate title. They may choose to pass the ownership down to anyone. In case of death, ownership is transferred to the surviving owner’s heir(s).

5. Community Property

In the case of community property, real estate is equally divided among a husband and wife, regardless of how the property is titled. In the event of divorce or death, the other partner gets or has a right to all the community property.

Bear in mind that only the following nine US states are community property states:

Arizona
California
Idaho
Louisiana
Nevada
New Mexico
Texas
Washington
Wisconsin

Here’s an example of how community property works. Let’s say a couple gets married in New Mexico and buys a house there. The husband can leave the property to his kids, or dog, when he dies and his wife cannot stop it. However, if he wanted to designate something to leave to an heir while he’s still living, he would need his wife’s permission to do so.

Ownership 1 — Photo Credit: Elements Envato

6. Sole Ownership

As the name suggests, sole ownership is when the property is owned by one person. The main advantage of sole ownership is that you don’t need other parties to authorize any transaction related to the property. But a transfer of homeownership would become problematic should the owner die without naming a beneficiary to the property in a will.

7. Partnership Owners

In business, a partnership is an association between two or more people, where one partner takes the liability of investment and the other makes all the business decisions.

8. Tenancy by Entirety

Tenancy by the entirety is a homeownership type that’s only applicable to married couples. This form of ownership assumes a couple is one person and transfers ownership to them as such. It also assumes that if one partner passes away, the entire ownership transfers to the surviving spouse. However, in the event of separation, tenancy by entirety converts to a tenancy in common.

Apart from homeownership types, it’s important for you to know who can be a property owner. There can be several types of property owners including:

Industrial and commercial companies
Insurance companies and pension funds
Construction companies
Property companies/developers
Private individuals
Overseas buyers

Which Home Ownership Type Is Best For You?

When there are so many options to choose from, it can become difficult to make the right choice. This is also the case with homeownership. When you’re thinking of buying property, keep the above-mentioned ownership types in mind and then determine which best fits your situation.

FAQs

What is the Most Common Type of Property Ownership?

The most common type of property ownership is known as “sole ownership,” also called “ownership in severalty.”

What Refers to “Proof of Property Ownership”?

The most common form of proof of ownership is a property deed, which is a legal document that identifies the owner of the property and provides a description of the property itself.

How is Ownership Defined Legally?

Ownership is defined legally as the right to use, control, and dispose of a particular property or asset. This right is typically established and enforced by law, and it grants the owner the authority to make decisions regarding the property, such as selling it, renting it out, or making improvements to it.

What is the difference between Title and Ownership?

The title refers to the legal right to own and use a particular property or asset. It is a legal term that indicates that a person or entity has the legal right to claim ownership of the property. Ownership, on the other hand, refers to the actual possession and control of the property or asset. It is a physical and practical concept that denotes that a person or entity has control over the property, regardless of whether they hold the legal title or not.

Conclusion

All too often, potential buyers don’t understand the difference between the types of homeownership in the flurry of purchasing a home. There are many types of ownership and each has its pros and cons. Therefore, it is prudent to understand the different types to avoid being blind-sided later on.

Buying a home can be a thrill of a lifetime. Before you sign on the dotted line, make sure your legal interests are protected. Get a real estate lawyer to help you better understand the different types of ownership before buying property.