How to Take Ownership of Massachusetts Property: Joint Tenancy
Joint tenancy is a potential co-ownership configuration to consider when taking ownership of property in Massachusetts and elsewhere in the US. Part two of our three part series on home ownership/tenancy configuration will examine the joint tenancy option.
When two or more parties have agreed to purchase a property together, they must decide how the title to the property will be held. Determining how you will establish this title must be an informed decision. This becomes especially important in the case of shared family-owned real estate and business real estate.
In part one of this series we examined Tenancy in Common. This post will summarize aspects of the joint tendency ownership arrangement. This will be followed by a review of Tenancy by Entirety.
Joint tenancy relies heavily on the collaboration and shared interests in the property of all owner/tenant parties. This is described as “Unity.”
There are four unities (unified rights), necessary to create a successful joint tenancy:
- Unity of interest,
- Unity possession,
- Unity of term,
- Unity of title
Joint tenants must commit to complete and equal ownership (Unity of possession)
Joint tenants all own equal shares of the property, proportionate to the number of joint tenants involved. (Unity of interest) in the whole of the property, as opposed to just parts of it.
Joint tenants obtain ownership with the same deed (Unity of title),
Joint tenants commit at the same time and for the same duration (Unity of term). If one of the parties sells their portion of the property, the joint tenancy reverts automatically to tenancy in Common.
There are additional rules within a joint tenancy. For example, unlike Tenancy in Common, joint tenants have the right of survivorship established through the deed, designating that a deceased tenant/owner’s property is transferred to the surviving co-owners. Probate can be avoided if there is at least one surviving Joint Tenant. This configuration can reflect significant savings in both time and finances and personal privacy. Joint tenancy ownership avoids estate taxes as the ownership shifts, at your passing to co-owner(s) Some owners add multiple family members and friends, to ensure having at least one reliable survivor upon their death. The simplification of the process has a disadvantage however, in that you lose your ability to control the distribution of your real estate. It cannot be left in a will, for example, to your direct descendants and may go to the designee defined by the surviving owner(s) at their passing. You are also potentially subject to your joint tenants’ financial burdens as your shared property can be tapped as a recourse to debt. It is important to note that when non-spouse is added to the property as a joint tenant, it is considered a gift, meaning gift-tax laws apply to the transfer. This is one reason that it’s so important to think about joint tenancy in conjunction with your entire estate plan.
Terminating Joint Tenancy
A joint tenancy can be broken if one of the co-tenants conveys their property interest to someone else. This would alter the arrangement to a Tenancy in Common for all parties.
More On Tenancy Relationships For Melrose MA Property Purchases
It is important to understand the unique tenancy relationships for Melrose MA property purchases. Each bestows different rights to co-owners and heirs. If you are unsure of which type of tenancy to select for your property purchase, contact 781-665-0099 at Tramontozzi Law Offices for advice and guidance.