How to Title Real Estate Owned by More than One Person

People who co-own real estate have a number of options for titling the property, with each option having a different impact on how the ownership of the property is handled, in particular in the event of the death of one of the owners.

What is the Title? When a person purchases a parcel of real property, the seller gives the buyer a deed which is recorded in the land records. Just like your car title, the deed reflects the ownership of the property, or as it is some times referred, the title to the property. When an individual who solely owns a parcel of land dies, the title to that land passes either by operation of their Last Will and Testament or by the Commonwealth of Virginia’s laws of intestate succession (or, in certain circumstances, to another person named in the original deed).

But what happens if two people co-own the land and one of them dies? This is determined by how they had the property titled when it was granted to them. 

Tenants in Common. The most basic and common form of co-owning land is called Tenants in Common. So for example, if two friends, Sarah and Allison, purchase a lake house together, the deed to them would say that the land is granted to “Sarah and Allison as tenants in common.” Tenancy in common is the default, so if the deed just says “to Sarah and Allison” and nothing else, it is assumed that they are tenants in common. 

During their lives, both Sarah and Allison have the right to use and enjoy the entirety of the property. But what happens if Sarah dies, perhaps in a tragic rope swing accident? When one tenant in common departs this life, that tenant’s interest in the property passes through  their estate according to the terms of their will or the laws of intestate succession. This would mean that the surviving tenant in common would co-own the property with whoever is the heir or devisee of the descendant. This can sometimes lead to people who do not know, or like, each other becoming co-owners of a piece of property.

Joint Tenants with the Right of Survivorship. The second manner in which co-owners of land can have the property titled is called Joint Tenants with the Right of Survivorship. In this example, Sarah and Allison have purchased a mountain cabin and the deed states that the property is conveyed to “Sarah and Allision as joint tenants with the right of survivorship.” The difference between tenants in common and joint tenants with survivorship is right there in the name–when one joint tenant dies, his or her interest passes to the surviving joint tenants, not through the departed co-owner’s estate. 

So if Allison dies in a tragic rock climbing incident, her interest would pass directly to Sarah. If Allison had a will that left her entire estate to family, they would still not get any interest in the mountain cabin as it was held with survivorship.

One other difference between tenancy in common and joint tenancy is that joint tenancy requires that all of the the tenants get their interest inthe property in the same documents. So if a person owns a parcel of land, they can deed part of it to someone else as tenants in common. So if Sarah owned the lake house herself, she could deed a half interest in the property to Allison as tenants in common and that would be no problem. But she cannot deed a half interest to Allison as joint tenants with the right of survivorship because that would mean they received their interest in different documents. If Sarah owns the mountain cabin all by herself and wants to co-own it with Allison as joint tenants, what she has to do is execute a deed granting the property to herself and Allison as joint tenants with the right of survivorship. 

Tenants by the Entirety. The third way that two parties can co-own property is as Tenants by the Entirety. This is a special type of property ownership that is only available to married couples. Tenants by the entirety has the survivorship benefit of joint tenancy, but also makes property owned this way immune from attachment by creditors of one of the spouses.

So to return to our example, let’s say that Sarah and Allison have married and purchased a farm in the Valley. The deed to them would grant the property to “Sarah and Allison, a married couple, as tenants by the entirety.” If one of the two of them were to perish in a tragic poultry house accident, the title would “ripen” in the other as the sole title holder. If Sarah were to be sued forsome reason and the creditor were to get a judgment against her, this judgment would not attach to the farm as it is held by Sarah and Allison as tenants by the entirety (however if the creditor were to have a judgment against both of them for the same debt, it would attach). The protection from creditors is the major benefit of holding title to property as tenants by the entirety.

As with joint tenancy, Sarah and Allison would need to acquire title to the property at the same time in the same document. Further, if they were to own property as joint tenants and marry after that, they would still need to have the property re-titled to reflect the marriage–tenancy by the entirety is not something that occurs naturally upon marriage. In fact, not every state recognizes it. Virginia is one of the states that does recognize this type of title. Virginia’s current statute, Va. Code § 55-2.2, states that any “husband and wife” may own property as tenants by the entirety. However, effective October 1, 2019, there is a new Virginia statute, Va. Code § 55.1-136, which uses gender neutral language that “[s]pouses” may own property as tenants by the entirety. This change recognizes the recent changes in marriage laws, both in Virginia and nationally, and brings real estate titling in harmony with that. 

Which Type of Title Do I Need? The question of which way to hold title to real estate is dependent on your specific circumstance. Is the property an investment between business partners? Is the property recreational owned by friends? Is the property owned by spouses? No one option is right in every situation–or even available in every situation. Further, due to the changes in marriage laws and the new tenants by the entirety statute, if real estate is owned by a married same-sex couple, it may be a good time to have an attorney review the title to the property and make sure that all of the possible legal advantages are being taken care of.  

If you have questions about the best way to title your property to makes sure you and your family or business are best protected, please do not hesitate to contact us.