Tenancy or Property Ownership in Massachusetts

What is The Difference Between A Deed And A Title?

A deed is a physical document that transfers the ownership of real property. 

The title is more conceptual as it describes the legal position regarding property ownership.  The title is the legal structure in which the ownership is held.  How you have the title of property gives you specific rights. Those rights will vary depending on how they are held.

Four Basic Property Ownerships in Massachusetts

As a homeowner, you will find there are four basic ways of holding a title in Massachusetts.  While there are other forms of property ownership we are going to just look at what a typical homeowner will consider when buying a home.

• Individual
• Tenants in Common
• Joint Tenants
• Tenants in the Entirety

Individual or Sole Ownership

When a property is held as individual ownership the title is in one person’s name.  It is the only tenancy available to an individual purchasing a home.

Generally, a single person would hold a property individually. If they are married, the individual decides to hold the title apart from a spouse.

Individual ownership is easy.  You do not need to answer anyone else.  The one downside is that even if there is a will, the estate may have to be probated.

Tenants In Common vs. Joint Tenants vs. Tenants in the Entirety

The next three types of property ownership are for ownership that involves more than one person.  

For non-married owners and sometimes even married owners, the question is, what is the best way to take ownership of a co-owned property? Tenants in Common, Joint Tenants, or Tenants in the Entirety?

There are differences between each, and it is critically important to discuss your personal circumstances and goals regarding how you hold the title with an attorney.

Tenants in Common

Tenancy in common is the default for unmarried property ownership when two or more are owners. 

With tenants in common, two or more individuals own the property. The shares can be equal or unequal, but all individuals share in the use of the property equally.

Unmarried owners, siblings, or divorced couples who have remarried are all candidates who would want to consider holding title as Tenants in Common. 

Tenants in Common: The shares are severable, meaning they are independent of the other shares.

Upon death, the shares in the property pass to the owner’s estate, not the other owners.  A tenant in common can also sell or give their portion of the property away at any time without permission of the other owners.

Joint Tenants

Joint Tenants, or Joint Tenants with Rights of Survivorship, are meant for two or more homeowners. Unmarried couples and family members often choose Joint Tenants for their home ownership.

There are two big differences between Tenants in Common and Joint Tenants.

First, ownership has to be equal. Each owner can sell or give away their share without the other’s permission, breaking the rights of survivorship.

Second, upon death, your ownership automatically passes to the remaining owners.  Thus, the rights of survivorship.  Having a will and naming another party as the recipient of your share of a home does not override the Joint Tenant ownership.  

One downside is that if one party is sued and the creditor goes after the home, all the owners share in the liability.

Being Joint Tenants as well as Tenants in Entirety will avoid having a home being probated and is often used as an estate planning strategy.

Tenants By Entirety

It also prevents one’s creditors from going after the house and removes the other’s liability.

Life Estate

Another type of tenancy involving co-ownership is a Life Estate. In this type of tenancy, a homeowner becomes a life tenant and gives ownership to a remainderman.

The difference here is that there is a separation between ownership and possession. The life tenant had ownership and possession, while the remainderman had ownership only. The life tenant cannot sell the property, but the remainderman can sell their interest.

The Life Tenant is responsible for maintaining and paying for the property. When the Life Tenant passes on, possession and ownership of the Life Tenant pass to the remainderman.

Often, an aging parent creates a Life Estate so the property transfers to a child upon death. This strategy is used as an estate planning strategy, specifically for Medicare planning.

Understanding Rights of Survivorship in Property Ownership

Rights of Survivorship is a legal concept ensuring that when one owner passes away, their share of the property automatically transfers to the surviving owner(s). This is commonly seen in joint tenancy and tenancy by the entirety (for married couples), providing a seamless transition without the need to probate your home.

The primary benefit of the rights of survivorship is its efficiency. It bypasses probate, saving time and legal expenses, but it also overrides instructions in a will. If you have specific plans for your property after death, another ownership structure may be more suitable.

However, rights of survivorship also carries responsibilities. Co-owners share equal rights to the property during their lifetimes and must share liabilities like taxes or mortgage payments. Consulting a real estate attorney can help determine if this ownership structure aligns with your financial and estate planning goals.

Tenancy Is More Complex Than You May Think

This is a simplified overview to get you thinking about how to take ownership of a home.  Each ownership option definitely has its pros and cons which are not covered in depth here.  How you take ownership effects:

• Your rights as an owner
• Protection against creditors.
• Future tax liabilities for your estate.
• How and to who the property transfers upon an owner’s death.

There are many subtleties to how you choose to hold a title on a home.  Also, laws regarding property ownership can vary from state to state.

Make sure you have advice from the appropriate professionals when it becomes time to choose how you will hold title.

Other Real Estate Resources

• Buying a house is a big deal.  Whether you are a first-time home buyer, a downsizer or a move-up buyer it is important to have a good overview of how to buy a house. 
• Now that the housing market has cooled down in some areas it is important to talk about the importance of a mortgage contingency.  Learn why you should never skip your home inspection.
• And while we are on the topic of home inspections….. Realize there are certain limitations to home inspections.  The first is a home inspector cannot comment on what he can’t see.