Types of Real Property Ownership
Law Offices of Michael D. Stewart
There are a number of different types of real property ownership in Florida. Knowing how to take title to property can be an important part of planning your financial future. Owning a property gives one certain rights and privileges with respect to the use of the property, such as the right to lease or the right to use the property.
The different types of ownership interests in property are called estates. Estates indicate the quantity, nature and extent of rights held in the property.
Non-freehold estates exist for a certain period of time. Freehold estates exist for an indefinite period of time. The two types of freehold estates are: 1) fee estates, and 2) life estates.
A fee estate is where the owner is entitled to full use and ownership of the property without restriction on disposition of the property. The most common of these is the fee simple estate, where the owner owns the property outright, subject only to restrictions such as existing easements, covenants and the like. At death, the owner of a fee simple estate’s property will be transferred according to his or her wishes, either by will, trust, or by intestate succession.
The owner of a life estate, on the other hand, is limited to ownership of the property for only his or her lifetime. At death, the ownership will end and the estate will revert back to the grantor or be transferred to what is called a remainderman – or one indicated by the grantor to receive the property after the life estate owner. Life estates are often used in connection with trusts.
The main types of joint ownership of real estate are: 1) Joint Tenancy, 2) Tenancy in Common, and 3) Tenancy by the Entirety.
A joint tenancy is where two owners hold a property and upon the death of one owner the property is legally transferred in whole to the survivor. A joint tenancy is common in connection with a married couple’s ownership of property – called a tenancy by the entirety – see below.
A tenancy in common is where two or more owners hold an undivided interest in the property. Each owner has his or her own separate legal title to his or her own undivided interest in the property. The joint owners have equal rights to possession of the property. Upon death of one of the owners, his or her share will pass not by right of survivorship, but to an individual or entity of his or her own choosing, whether by will or through intestacy. If a tenant in common chooses to sell his or her interest in the property, the purchaser will take the interest and become a tenant in common with the other owners.
Tenancy by the Entirety is created by a conveyance to husband and wife. Differing from a Joint Tenancy, in a Tenancy by the Entirety, neither the husband or the wife can separately transfer their interest in the property during their lifetime. Dissolution of Marriage in Florida, or divorce, will negate a tenancy by the entirety. While the tenancy by the entirety exists, the interest of either the husband or the wife cannot be attached by creditors.
Choosing the property ownership interest in real estate is an important financial planning matter for both individuals and companies.
The Law Offices of Michael D. Stewart