By Dan Wade, Esq. of Ianniello Anderson, P.C. ©2019
Congratulations! Your offer has been accepted and you’ve managed to successfully navigate the various contract contingencies to arrive at the closing date. You sit down at the closing table and your attorney asks you, “How would you like to hold title?” I can assure you, “As Heavyweight Champion of the World!” is not the proper response. You can hold title in a number of legally defined ways and how you hold title to the property can have legal ramifications down the road. So, it’s important that you discuss your options with your attorney to fully understand the distinctions, benefits, and restrictions of the different ways that title can be held. Let’s go over a few of the most common ways title is held in New York State:
- Sole ownership – One person, alone, owns a complete undivided interest in the property. Upon their death, the ownership interest in the property will transfer either to their beneficiaries according to their Will, or to their heirs as per the laws of intestacy (distributing their assets per the laws of New York State) should they not have a Will.
- Tenants in Common – Two or more people own the property in either equal or unequal percentages as designated by the parties on the deed. Any of the co-owners may sell or transfer their percentage of interest in the property to another individual without affecting the other co-owners’ percentage in interest. Upon the death of one of the co-owners, their interest will either transfer to their beneficiaries as per their Will or to their heirs as per the laws of intestacy should they not have a Will. The remaining co-owners retain their percentage of interest in the property.
- Tenants by the Entirety – Is only allowed for married couples. Each spouse owns an equal percentage in the property and may not sell or transfer the property without the consent of the other spouse since the marital unit is considered a single entity. Tenancy by the entirety also creates a right of survivorship between the spouses. In the event that one of the spouses passes before the other, the interest of the deceased spouse transfers automatically to the surviving spouse without the need to file additional paperwork with the Surrogates Court in order to probate (officially approve) the Will.
- Joint Tenants with Right of Survivorship – Two or more people own the property in equal percentages. Unlike tenancy by the entirety, a joint tenant may sell or transfer their interest in the property without the consent of the remaining tenants. However, if they do, the new co-owner’s interest becomes an interest as a tenant in common. When a co-owner who held title as a joint tenant with right of survivorship passes, their interest automatically transfers to the surviving tenants in equal percentages without the need without the need to file additional paperwork with the Surrogates Court in order to probate the Will.
- Living Trust – Property is held in the name of a previously established Living Trust and managed by a Trustee named in the Living Trust. Typically, the initial Trustee would be the person intent on using the property. In the event of their death, the trust documents would name a successor Trustee to manage the decedent’s affairs and also name beneficiaries who would receive their property upon their death. The successor Trustee would be able to transfer the property to the decedent’s beneficiaries without the need for probate. This option takes a bit of planning, so you would want to discuss and coordinate this option with your attorney in advance of the closing date.
Although these are the most common ways title is held in New York State, the above list is not exhaustive. You should discuss all of your options with a knowledgeable, skilled real estate attorney, who can walk you through the pros and cons of each and help you decide what is best for you. After how far you have come to get to the closing table, you don’t want anyone throwing in the towel on you when the closing bell rings!
DISCLAIMER: Although written by an attorney, this article is not to be construed as legal advice. The purpose of the article is to inform and instruct. Because every situation is unique, please refer all legal questions to qualified legal counsel.