Homebuyers beware of “Tenants in Common”
When purchasing a home, every detail matters. From choosing the right neighborhood to negotiating the price, you’re making decisions that affect your future. But one often-overlooked detail could create unintended consequences: how your names are listed on the deed.
We recently worked with a married couple who encountered an issue with their deed designation. Their experience is a cautionary tale for all homebuyers.
This couple recently closed on their dream home. However, the deed designated them as “tenants in common”. At first glance, this might seem like a minor technicality. After all, they purchased the property together, and they’re married. What difference could it make? Unfortunately, the implications became clear during our review of their Estate Plan.
When a property is owned as tenants in common, there is no right of survivorship. Each person holds an individual share of the property. Upon the death of one owner, their share does not automatically transfer to the surviving owner. Instead, it passes according to the deceased’s Will, or if there is no Will, through state intestacy laws. For this couple, that meant if one spouse passed away unexpectedly, the surviving spouse could face legal complications or even lose part of the property to other heirs.
Tenancy by the Entirety
By contrast, holding the property as “tenants by the entirety” or “joint tenants with rights of survivorship” provides a layer of protection. In these forms of ownership, the property automatically transfers to the surviving owner upon one owner’s death, avoiding Probate and ensuring continuity. This is particularly important for married couples who intend for the surviving spouse to remain secure in their home without the need for additional legal proceedings.
NOTE: Spouses should own property as tenants by the entirety as the creditor of one spouse cannot attack said property to satisfy a debt owed by that spouse except in limited circumstances.
Fortunately, we helped the couple correct their deed designation and retitled it to their newly-created Revocable Living Trusts, but the situation underscores the importance of understanding what’s on your deed before you sign it. It’s crucial to consult professionals, like title attorneys, realtors, and Estate Planning professionals, to ensure your ownership structure aligns with your goals and family’s needs.
Before signing, review your deed carefully. If you’re unsure of the implications of the ownership type, don’t hesitate to seek professional advice. Taking this step now can save you and your loved ones significant stress and uncertainty later.
Take the first step to protect your money and loved ones by calling us at 301-696-0567 or self-schedule online at www.lenaclarklegal.com. We make Estate Planning & Probate easy!
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