A husband and wife purchased a home together as joints tenants, with a right of survivorship. This was a second marriage for both parties, and both parties had children from their first marriage. The wife died, and the property was transferred to the husband as 100% owner. When the husband died the property was sold for $600,000 and the proceeds went to the husband’s children. The wife’s children were angry as they received nothing.
When you purchase a home with another person you choose the type of ownership that will appear on the title. The two most popular options are joint tenancy or tenants in common. Joint tenancy is a type of home ownership where everyone on the title has an undivided interest. If a married couple purchases a home together as tenants in common, they own the property equally with a right of survivorship. If one party dies the remainder of the property is transferred to the surviving spouse, and that spouse becomes 100% owner. If they get divorced and sell the house, the proceeds are split 50/50 unless ordered otherwise by the court.
Tenants in common is more of a partnership, where each party owns a percentage of the property and may have different roles in managing the property, which determines their percentage of ownership. Each party can sell their share at any time, so if two people live in a house that they own together as tenants in common, one party can sell their share and a new person could move.
If one party dies, their ownership portion is passed on to their heirs instead of to the other owner. For example, if a husband and wife purchased a home as tenants in common and they each had 2 children from a previous marriage and the wife died, the new owners would be the husband and the wife’s 2 children. When the husband dies the new owners will be the 4 children from both marriages.
If you purchase a property as tenants in common, it is wise to seek legal advice to address a termination plan if there is a dispute, and if you have different heirs than the person you are purchasing property with, you should seek legal advice to determine the best type of ownership for you.
An experienced real estate agent can help you compare the features and benefits of the waterfront homes available in Chisago County, including the recreational lakes, small private lakes, or riverfront homes.
Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to firstname.lastname@example.org. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.