Tenancy & Ownership
Tenancy - Any person who has an " interest" in property has tenancy in property.
Title - A person who holds title to property has tenancy in the property as an owner.
Lease - A person who has a lease on property usually has periodic tenancy or a tenancy-at-will on the property. This means the person has a temporary estate of the property they are possessing.
Tenancy And Ownership
Fee Estate - A fee estate allows the title holder(s) to devise (pass on) their interest to their heirs. The tenancy designation of the fee estate tells us who must sign to devise or sell their interest to others. Basically, who has the authority to enter into agreements regarding the property?
Benefits of Tenancy - The tenancy designation also tells the world that has the authority to benefit from the property. Whether it is to receive tax write offs, receive rent, devise title to heirs, simply "cross/use property" (easement), etc.
Tax on Tenancy - Tenancy also specifies who is responsible to pay taxes that are levied against the property.
Devise Property - Some forms of tenancy in community property states allow an owner to devise (passing on) their title interest in property to heirs even though there is a surviving spouse. States such as Texas, Washington, and Idaho allow this form of tenancy. Some states, such as Oregon, prevent this form of tenancy and pass the entire interest to the surviving spouse.
Survivorship Designation - If a tenancy form has the word " survivorship" in it, owners are unable to devise/pass on the property to their heirs. This word means that the last surviving owner will gain 100% ownership of the property; the last surviving owner.
Joint Designation - If a tenancy form has the word "joint" in it, owners are unable to devise/pass on the property to their heirs. This word means that the last surviving owner will gain 100% ownership of the property; the last surviving owner.
Entirety - If a married couple owns property by entirety, each is unable to devise/pass on the property to their heirs. This word means that the last surviving spouse will gain 100% ownership of the property. The last surviving spouse gets the "entire" tenancy of the property.
State Tenancy Laws - Each State has the authority to establish its own tenancy laws. Oregon, as an example, disallows the use of joint and survivorship tenancies for non-married owners. It requires married couples to carry jointly purchased property under the entirety designation. Texas, Washington and Idaho disallow by entirety for married couples, but allow joint and survivorship designations for non-married owners. We will talk about your specific state tenancy laws later in the course.
Multiple States - When married couples own property in multiple states, it is important to establish tenancy in a proper manner in each state. If this is not done, it can cause estate problems and extensive legal costs.
Unities of Ownership
4 Unities of Ownership/Tenancy - When multiple owners hold title to property, there are 4 unities involved with the property. These unities include time, title, interest, and possession.
Tenancy In Common - Multiple owners that can have uneven ownership and can devise/pass on their interest to their heirs. However, they have an undivided interest and use of 100% of the property.
One Unity - Each owner has an undivided interest or use of 100% of the property.
Tenancy In Severalty - This form of tenancy specified on the title tells the world that there is only one owner.
No Unities - Since there is only one owner, the 4 unities do not apply.
Getting Married - When a person holds title as Tenancy in Severalty and gets married, the property will remain individually owned. The property would be designated "Separate Property" of the involved husband or the involved wife. The other spouse would have no claim to the property.
Inheritance - If a person inherits property from a decedent and is the sole designated owner, the property would be designated Tenancy in Severalty and become separate property even if married.
Gift - If a person received property as a gift and was the sole designated owner, the property would be designated Tenancy in Severalty and become separate property even if married.
Commingling - However, if tenancy by a spouse is tenancy in severalty and the married couple utilizes joint funds regarding the property, the other spouse could claim that it is community property. This is when a lawyer should be contacted regarding this legal matter.
A brother and sister held title to property as tenants in common. The sister had a will drafted, providing that upon her death, her interest in the property is to pass to her son. The brother and sister now hold title as:
A) Tenants in common
B) Tenants in severality
C) Life tenants
D) Tenants by entirety
An estate in severalty is one held by:
1. 3 or more persons
2. 2 persons
A) 1 only
B) 2 only
The right of survivorship is a feature of:
A) Tenancy in severality
B) Tenancy by the entirety
C) Tenancy in common
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