Real Estate: Different ways to hold
title to your property
How you hold the ownership of the asset (title) to your
property is very important. If something goes wrong and one spouse or partner is
sued, how you and your spouse or partner own your home can mean the difference
between having to sell it to pay off a judgment, and being allowed to live in
it. Here the the most common ways to hold title to your home:
- Individual - Most likely this will be your option if
you are single. But in very few states, you may be able to hold title in a
land trust, which is a legal entity in which the only asset in the trust is
the property you are buying, and you are the beneficiary of the trust. Land
trusts may also be available to two or more buyers, married couples and
children.
- Joint tenancy - Joint tenancy with rights of
survivorship is the most common way married couples hold property. Owning as
joint tenants means each owner has an equal right to the entire property, that
none of the owners may sell their portion of the property without the consent
of the other owners and that, in the event of the death of one of the owners,
the surviving owners automatically retain title to the entire property by "Right
of Survivorship". This type of tenancy is only for married couples.
- Tenancy in common - This allow each owner to own a
stated portion of the property separately and is free to deal with his
portion as he wishes. For example, you may own 30 %, your spouse may own 30%
and your parents may own 40%, but you may each use the whole property. You
cannot be restricted to just the 30% that you won. And, you may sell your
share of the property to anyone you choose without permission from other
owners. Tenancy in common is available to unmarried or married couples.
- Tenancy by the entirety - This is similar to joint
tenancy with rights of survivorship. But both spouses must agree to the title
arrangement before the property is subject to one spouse's creditors. As long
as the couple is married, the interest of each spouse is protected. For
example, if one spouse is sued, the creditors could not attach a lien on the
house because each spouse owns the entire property. They have to wait until
the marriage is over or when the property is sold and a claim may be attached
to the proceeds. This type of ownership is not available in every state, and
it's only for married couples.
There are several less common ways you can hold title to the
property using trusts such as living trust, charitable remainder trust, land
trust, qualified personal residence trust and family limited partnership. Before
you close on your home, ask your real estate lawyer about the best way you
should hold title to your home depending on your personal situation.
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Do I need a new
title policy when I refinance my mortgage?
You will not be required to obtain a
new owner's title policy when you refinance your mortgage, but you
will be required to obtain a new "lender's policy" of title insurance,
naming the lender as the insured. A mortgage lender requires this new
policy of title insurance to be sure you have not incurred any new
liens or encumbrances on the property since the original time of
purchase.
You may qualify for a discounted rate
or "re-issue" rate on this new title insurance policy if your previous
policy was issued in the last 2-5 years. Ask your title company or
escrow officer if you qualify. |
Related Articles:
Table of Contents:
-
Should
you buy a home?
Renting vs. Buying:
-
Steps to buying a home
-
What is a
Mortgage and do you needed?
-
Different types of Mortgages
-
More Mortgage
Choices
-
0 to 5% down
with FHA and VA loans?
-
Cosigning: The Pitfalls
-
Qualifying for a
Mortgage
-
How much of a
mortgage and a house can you afford?
-
Finding a home with FSBOs & Real Estate Agents.
- It's closing
time: Title and the keys please!
-
Tapping your home
equity: Refinancing
-
Tapping your home equity: Home Equity Loans
-
Frequently
Asked Questions (FAQs) on Real Estate & Mortgages
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