Level 2 Chapter 2: Forms of Ownership Flashcards
Estate in Severalty
This kind of ownership is also sometimes called tenancy in severalty, sole ownership, or ownership in severalty, owned by only one entity. Property has only one owner, whether that is a person, corporation, or other legal entity. That person/entity can sell the property, hold it, rent it, will it to someone else upon their death, or do what they please with it, without the permission of anyone else.
Co-Ownership
Legal arrangement in which two or more individuals hold ownership rights in the same property. 3 types: Tenancy in common, Joint tenancy, Tenancy by the entirety
Undivided Interest
Gives each co-owner the right of possession of the whole property, not simply a portion of it. Tenancy in common requires only one unity: the unity of possession. Also called undivided interest, it means that each co-owner has the right to use the entire property, regardless of what proportion of the property they own.
Right of Survivorship
The statutory principle of survivorship tenancy, which means that when one co-owner dies, their ownership interest reverts to the surviving co-owner(s) Without the right of survivorship, a co-owner’s interest goes to their heirs if they die, instead of the remaining co-owner(s).
The Four Unities
Unity of possession, Unity of interest, Unity of time, and Unity of title (PITT)
Unity of Possession
Each co-owner has an equal right to enjoy the possession and use of the whole of the property, not just some designated portion thereof. No co-owner has the right to possess a part of the property exclusively.
Unity of Interest
Provides that each co-owner holds an equal share in the property.
Unity of Time
The requirement of co-owners to acquire their ownership or interests at the same time.
Unity of Title
Requires co-owners to acquire their property from the same transaction. Co-owners must also hold title under the same document (such as a deed or a will).
Tenancy by the Entirety
A type of ownership reserved for marrieds only (that only exists in certain states). Legal spouses each hold an equal and undivided interest in the property which cannot be conveyed or encumbered without consent of the other. Just like joint tenancy, it comes with the right of survivorship. There are 26 states that recognize tenancy by the entirety. Because tenancy by the entirety is a co-ownership between only two people, if one of the co-owners dies, the surviving spouse would own the property in severalty. This Is How Married Couples Take Title in PA. How to Terminate a Tenancy by the Entirety
There are three ways to end a tenancy by the entirety:
By death: To be avoided, if possible. When this does occur, it results in tenancy in severalty.
By agreement: If the spouses both agree to terminate this ownership type, they can each sign a new deed to that effect.
By divorce: When a couple divorces, their tenancy by the entirety automatically becomes a tenancy in common, unless a judge rules otherwise.
Tenancy in Common
Most common form of co-ownership for unmarried co-owners. Undivided interest in the property. The right of inheritance, not survivorship, the ability to own unequal shares of the property. Each co-owner can sell, mortgage, lease, or transfer their ownership share without the permission of the others, so long as the transfer doesn’t interfere with the ownership rights of the others.
Right of Inheritance
If one co-owner dies, their share goes to their heirs, not the rest of the co-owners.
Unequal Shares
Tenancy in common does not require the unity of interest: Instead, co-owners can own unequal shares. An example would be 80/20 or 50/25/25, though they all have an equal right to use the property. Remember, that’s undivided interest.
Joint Tenancy
Second type of co-ownership. Requires all four unities. Usually comes with the right of survivorship (in some states, this must be spelled out in the deed). Requires the unities of possession, time, title, and interest. That means co-owners ALWAYS hold equal shares (unity of interest). They have undivided interest in the property (unity of possession). They purchased the property all together at the same time (unity of time) with the same title document (unity of title).
Right of Survivorship
Joint tenancy generally includes the right of survivorship rather than inheritance. If one joint tenant dies, their share of the property is absorbed by the remaining joint tenants, instead of passing to their heirs. Only humans can be joint tenants. Corporations (and robots) can never die, so they can’t own property as joint tenants.
Partition
The ability to divide certain forms of co-ownership into separate interests or to convey a partial interest in a co-owned property unilaterally.
Partition Suit
If the parties can’t come to an agreement on how to proceed, one co-owner can always sue the others to legally dissolve the co-ownership and either divide the property itself, or divide the gains from the sale from the property.
Co-Ownership: Married Couples
The kind of tenancy you have with your spouse will depend on the laws of your state. The options are: Tenancy by the entirety, Community property, Either joint tenants or tenants in common, depending on what you choose to put in your deed
Fifth Unity
The unity of person and states that co-owners are, for legal purposes relative to ownership of the property, a single, indivisible unit. This is the main distinguishing point between tenancy by the entirety and community property: Property held in tenancy by the entirety is held not half and half by each spouse, but by a third entity, a sort of legal fictional person.
Couple Co-Ownership Type 2: Community Property
There are nine states that adhere to the concept of community property, but Pennsylvania is not one of them. The legal concept is that all property acquired during a marriage is acquired due to the shared effort of both partners. Therefore, it’s equally owned by the two of them. In community property states, any property that is acquired during a marriage is considered to be owned equally by both spouses, and cannot be sold without the signatures of both spouses.
Separate Property
Type of property owned by a spouse that is not community property. Separate property can be acquired in several ways: Purchased before the marriage, Acquired by one spouse through a gift or inheritance during the marriage, Purchased by the spouse with separate funds during the marriage. Note that for funds to be considered separate, they must always be kept apart from shared funds. Separate property like an inheritance which is deposited into a shared bank account becomes community property.
Couple Co-Ownership Type 3: Dealer’s Choice
That means that when a couple buys a home in one of these states, they will need to specify on the deed if they want to hold the property as tenants in common or joint tenants with the right of survivorship.
