Are you looking to purchase real estate in New York? Whether the real estate is your first house in Westchester, your vacation property in Dutchess, or your flat in Brooklyn, one common question that arises is how should you take ownership, especially if you are buying with your spouse, your life partner, or just your “friend.” There are many different forms and types of ownership, but they all start with what’s called ownership in what’s called “fee simple absolute.”
Fee Simple
When you own real estate outright, holding and controlling the entire bundle of sticks, we call it owning it in “fee simple absolute.” That is, as the title holder you, as the individual have the full absolute possessory right to the property, now and in the future, for an infinite duration, with no limitations on its inheritability (right to be transferred to others through death). The holder of the real estate owns entire estate (or bundle of sticks), and has the absolute and unfettered legal right to dispose of it without permission or consent by anyone else.
If you are buying a condominium or townhouse, you typically purchase the residential unit in fee simple, but have a right, in common, with others to use the common areas. Each unit has its own tax bill, deed, mortgage and ownership rights but shares in the maintenance of the common areas.
Joint Tenancy with Right of Survivorship
If you take title with another individual, you no longer own the property in “fee simple.” One common way to own property with others is as Joint Tenants with Rights of Survivorship. That means each titled owner holds an undivided share of the real estate, which, upon death of one partner, the surviving owner or owners retain an undivided right to the entire estate. The heirs of the dead person have no individual claim to the property, which transfers, as a matter of law, to the remaining people listed on the title to the property. That is, the partner has the “right of survivorship.”
If the partners are unmarried, the deed to the property should specifically state that you are taking with rights of survivorship, otherwise, in New York, you are presumed to be taking as tenants in common (see next definition).
This method of ownership sometimes creates issues for children of divorced couples, where the children of unmarried divorced couples, erroneously, that they will inherit one party’s share of the house purchased after the divorce, when, in fact, the house transfers without further court intervention to the surviving divorced partner.
Tenancy in Common
In New York State, In a title held as a tenancy in common, each owner has an undivided interest in the entire property. Each tenant has the right to possession of the whole property. There is no right of survivorship. Each tenant has a distinct proportionate interest in the property, which passes by succession. There is a presumption that a conveyance to two or more persons is a tenancy in common.
Tenancy in the Entirety
This is a marital estate, which can only be created between a husband and wife. It is similar to a joint tenancy except that the right of survivorship cannot be destroyed, since severance by one tenant is not possible. An existing marriage is requisite for a tenancy by the entirety. In many states there is a presumption that a tenancy by the entirety is created in any conveyance to a husband and wife. This type of title is considered somewhat archaic and the majority of states have abolished this type of tenancy, favoring instead that the couple take title to the property as joint tenants with right of survivorship.
If you need more information, call your lNew York real estate lawyer.