You may have been asked at some point this question. “What manner will you be holding title?” And if you are like most people you probably responded by saying “what?” In fact most mortgage brokers and Realtors don’t even know what that means. It is important if there is ever a death with someone on title.
There are three main ways to hold title.
1. Sole Ownership – If one person holds title this way they have all rights to the property. They can encumber, rent, sell, donate, etc. Upon death the sole owner can pass on the property through a will or a trust otherwise it will go to his/her heirs through probate.
2. Joint Tenancy – This is when two or more people own the property and everyone on title has equal right to the property. Title must be transferred on one deed and owners must all agree on what will be done with the property.
In this manner right of survivorship applies meaning upon the death of an owner the surviving owner(s) hold full title. In this case the death certificate must be recorded in the county the property is located. You would want to use Joint Tenancy to avoid probate.
3. Tenants in Common – This is when two or more people own a piece of property but they only own a percentage with no right of survivorship. A person can encumber, sell, rent, donate, etc its percent of ownership in the property. The owner does not need permission from any other owner to sell their interest. For this reason, upon death, title must transfer through other documents like a will or trust. It will not automatically transfer to the other owner(s).
It is probably a good idea to get legal advice before making any decisions on how to hold title but at least now you know what the heck they are talking about when they ask you this question.