Each type of property ownership has its own benefits and drawbacks, and issues such as tax implications, liability, and other issues must be taken into account. A Pennsylvania real estate lawyer can help you understand how each type of real estate ownership works and help you make informed decisions about what may be most suitable for your specific circumstances.
As its name suggests, sole ownership means that a piece of real estate belongs to a single individual. When someone is the sole owner of a property, they get to make all of the decisions about what to do with it and when to sell without any input or permission from tenants or co-owners.
Although sole ownership can simplify things, it can become complicated when someone passes away and the title to the property needs to be transferred. Even if heirs to the property are designated in a Will, it may have to go through probate, which can be costly and time-consuming.
Putting property in a irrevocable trust can help avoid probate, but it’s important to have a estate attorney help you set up the trust to avoid pitfalls down the road.
When two or more owners own shares of a property, it is considered a joint tenancy. Each person owns a percentage and is entitled to income, use, and rights to the property, including mortgage and tax benefits.
One of the key elements of joint tenancy is the right of survivorship. This means that if one or more of the owners pass away, ownership automatically passes to any surviving owners. Rights of survivorship enable ownership to be transferred easily, without having to deal with probate.
When entering into a joint tenancy agreement, the deed or property conveyance must specifically state that rights of survivorship have been created. Finding the best contract lawyers who are well-versed in handling real estate transactions can help to ensure your agreement protects the rights of everyone involved.
Tenancy in Common
Although this type of ownership is similar to joint tenancy and is common in commercial real estate, it does not include rights of survivorship. Tenancy in common can be split into different percentages among the tenants and does not provide equal use, rights, or income.
Tenancy by the Entirety
With tenancy by the entirety, each spouse in a marriage owns an equal share of a home or commercial real estate asset. The type of ownership offers rights of survivorship, and the title is automatically transferred to the surviving spouse if the other dies. In cases involving divorce, typically both spouses become tenants in common and continue to own an equal share.
Other Types of Commercial Real Estate Ownership
Limited Liability Company (LLC)
Real estate can also be owned by a Limited Liability Company (LLC) or corporation. An LLC protects owners from personal liability and enables the LLC’s members to pay the business taxes through their personal tax returns.
An owning corporation is a separate legal entity that owns a property. The corporation can be sued and property can be acquired and sold by creditors. Before deciding to purchase a property as an LLC or corporation, it is vital to consult experienced business liability lawyers who can advise you on which option will best suit your needs and protect your interests.
Do you need help with a real estate transaction, title, or deed? Our lawyers for real estate can help.