Different Ways of Property Ownership
We get asked frequently about how different ways to own real property work and their respective pros and cons. We created this chart to help highlight the key differences and pros and cons.
Five Key Property Ownership TypesSole Ownership (e.g. fee simple), Joint Tenancy, Tenancy in Common, Tenancy by Entirety and Community Property.
Please see the chart for the differences and pros and cons for the first four typesWe will not get into the nuances of community property here.
Say, for example, you wish to pass the property on without needing to write a will or having the property go through probate, maybe joint tenancy or tenancy by entirety (if you and the other owner are married) is the way to go. But if you are buying a piece of property with a friend and want to retain the maximum flexibility and control, then go with tenancy in common. And of course, owning a property by yourself might be the cleanest way to do it, as you can deal with it as you see fit. To make matters worse, in community property states, a piece of property may be considered to be community property (depending on when it’s acquired) by virtue of marriage. We don’t want to get into the community property topic here today.
Many awesome resources exist online that explain the differences and pros and cons really well. See Investopedia or this article on Moneycrashers.com. For our love of graphics and simplicity, we created this chart below. By simplifying the categories into a chart, we hope to help you wrap your head around the nuances of the various types of property ownership. Hopefully this gives you a clear and crisp picture of the various aspects of different property ownership types. The differences relate to finances, inheritance, relationship to marriage, etc. Note this is not legal advice. For more questions about this, please contact a real property lawyer and/or a trust or estate lawyer, if applicable.