Buying a house requires attention to many details. One important decision is how to take title of the house on the deed of trust, which is the document the mortgage company uses to change ownership of the property title from the seller to the buyer. Placing your names on title as joint tenants is one option. Understanding the pros and cons of doing so helps you make the right choice for your situation.
Two or more people must be named on the deed of trust to hold title in joint tenancy. This is an option for married couples, business partners, relatives or others who co-own real estate. Joint tenants in most states own the property equally, and it cannot be apportioned any other way. Once one joint tenant is removed from the deed, the other person automatically owns 100 percent of the property. To establish joint tenancy on a deed of trust, specific wording is used, such as "John Smith and Jane Smith as joint tenants."
Property held in joint tenancy is transferred to the other owner without a court probate procedure when one of the tenants dies. To ensure this will occur, the wording, "with right to survivorship" can be used when the deed of trust is initially filed. In addition, debt owed by the deceased cannot threaten ownership of the property if the remaining person is not involved in the creditor's action to collect. If one joint tenant no longer wants to own the property, it is simple to have the name removed from the title by filing a new deed without permission from the remaining owners.
If you choose a joint tenant who owes creditors, you can risk your ownership if a judge rules the home can be used to pay back the debt. If both people on the deed die at the same time, the property may require probate before it is inherited by its beneficiaries. Because each owner has full rights to the property, disputes can arise about financial obligations and sharing occupancy, for example. When one owner wants to sell the property, but the other does not, a judge can rule that it must be sold regardless of the remaining titleholder's wishes.
If you plan to leave your house to someone other than the person listed as the joint tenant, you will not be able to do so, even if your last will and testament specifies it. To ensure that your heirs inherit your portion of the real estate, you and the other person named on the title should consider changing ownership to tenancy in common, so that you can assign any beneficiary you choose. Placing someone, such as one of your children, on your title as joint tenant can have tax implications, so talk to a real estate attorney before you do so.
- Realty Times: What's A Deed Of Trust?
- Los Angeles Times: Homeowners Should Be Careful About How They Hold Title to Properties
- Bills.com: Joint Tenancy
- Nolo: Avoiding Probate With Joint Tenancy
- Chicago Tribune: Pros and Cons of Joint Tenancy
- Inman News: Pros and Cons of Joint Tenancy Home Ownership
- Kulas Law: The Pros and Cons of Joint Tenancy
Carol Deeb has been an editor and writer since 1988. Her work has appeared in magazines, newspapers and online publications, as well as a book on education. Deeb is a real-estate investor and business owner with professional experience in human resources. She holds a Bachelor of Arts in English from San Diego State University.