How Should Two (or More) People Own Property? (Part I)
People rarely consider how they should take title to property. When a couple contemplates the purchase of property they normally think about the renovations they want to make or the furniture they want to buy. However, before purchasing property one should always consider how to title the property.
In North Carolina, there are three principle forms of property ownership: Joint Tenancy with Right of Survivorship, Tenancy by the Entirety and Tenants in Common. In this three part series, we will examine and discuss the main characteristics and possible concerns of these three principal types of ownership.
Joint Tenancy with the Right of Survivorship
Under a joint tenancy with the right of survivorship, when one owner dies, the other joint tenant gets that owner’s share in the property. The heirs or devisees of the joint tenant take nothing, regardless of the provisions of the deceased owner’s will.
If someone desires this type of ownership, it is highly recommended that an attorney prepare the vesting document. In order to create this type of ownership there are several requirements that must be met. These requirements include (1) All tenants must acquire their interest at the same time and from the same instrument and (2) the instrument creating the joint tenancy with the right of survivorship must explicitly state that the purpose of the instrument is to create a joint tenancy with the right of survivorship.
One of the negative aspects of the joint tenancy with right of survivorship is the destructibility feature. Meaning, despite the “right of survivorship”, one joint tenant can dissolve the joint tenancy with the right of survivorship by transferring that owner’s undivided interest to another party. Upon destroying the joint tenancy with right of survivorship, the tenants now own the land as tenants in common.
Ryan C. Hawkins is a partner at Ferguson, Hayes, Hawkins & DeMay, PLLC and a member of the Real Property Section of the North Carolina Bar Association.