Types of Property Ownership
To many people, purchasing an investment property or a home is a wise decision. However, many of them overlook the ownership title aspect of the properties and how it affects their financial situation. A complication can arise if your properties are incorrectly titled. You can also gain or lose tax benefits depending on how those assets are characterized. These are the main types of property ownership.
Joint Tenancy
Here, two or more individuals exclusively hold ownership. The ownership interest must arise at the same time and within the same instrument. Likewise, each owner must have undivided and equal interests and rights to the property. Upon death, the remaining owners take up the interests of the deceased owner.
Tenancy in Common
This implies ownership in more than two legal entities. Here, one of the four characteristics of joint tenancy isn’t present. Upon the death of an owner, his/her interest passes to his/her estate rather than the remaining owners.
Community Property with Survivorship Rights
Property jointly owned by a wife and husband as community property should pass to survivors in case either spouse dies.
Common Property
This is property owned by a married couple and got acquired during the marriage with jointly-owned funds. Upon the death of one spouse, probate must be obtained. Ownership doesn’t pass automatically to the remaining spouse.
Entities Owning Property
Individuals: This is any person who holds title to a property, including minors.
General Partnerships: These are associations of more than two partners. They have equal rights to act on behalf of other partners in the execution of the partnership assets. Each partner has an equal share in the association’s profits and liabilities. A general partnership doesn’t need to get filed with the Secretary of State.
Limited Partnerships: These are associations of at least two general partners and a minimum of two limited partners. Both sets of partners share in the profits of their interest in the partnership. Limited partners are liable for debts to the extent of their investment, while general partners are liable for the association’s debts.
Corporations: Stockholders are the owners of a corporation. Its officers handle daily operations, while the board of directors makes corporate decisions. Stockholders are protected from the corporation’s liabilities by only being liable for debts to the extent of the number of shares they hold.
Trust Agreements: In this type of ownership, titles are held by a trustee who has fiduciary obligations to manage the trust property professionally and for the benefit of its beneficiaries.
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