This brief guide provides you valuable information about the legal effects of jointly owning real property.
When real estate is held jointly with right of survivorship by two persons, the property will pass to the surviving owner when one of the owners passes away. (If the two persons are married to one another, the joint ownership will be referred to as a "tenancy by the entirety," but it is essentially the same as a "joint tenancy").
Transfer by Operation of Law
Upon the death of one of the two joint owners, the property will pass to the surviving owner by operation of law. This means that the moment one of the two joint owners passes away, the property is owned by the survivor, even if a new deed is not recorded.
Keeping it out of Probate
When a property is jointly owned (or held by the "entirety"), the real estate is considered a "non-probate" asset. Thus, no probate or administration proceeding will ordinarily be necessary in order to transfer the property.
Advantages of Joint Ownership
When a property is owned with right of survivorship, the transfer of ownership is quick, easy, and cheap. By way of example, let's imagine that persons "A" and "B" (granted, they are not imaginatively named) own real property together, but not as joint tenants. If "A" dies, his interest in the property passes to his estate, so that "B" now owns the property with the estate of "A," and ultimately "A"'s heirs. If B wants to sell the property, he can't do so unless and until a probate or administration proceeding is done as to A's estate, and afterward B will be able to sell the property only if A's heirs agree.
Joint Ownership Has a Downside Too
While joint ownership works well for married couples or others who are in a committed relationship, and sometimes for close family members, it can be disadvantageous in situations in which the two owners have others whom they wish to benefit. As an example, A may have a wife or children whom he wants to benefit in the event of his own death, rather than B, who may be a friend or business partner.
Speak to an Attorney
Before deciding how to hold real property, be sure to speak with an attorney. The attorney will be able to evaluate your priorities and help you to make a decision that makes sense for you.
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