Law Room - Taking Title
Law Room - Taking Title

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Buying real estate, whether it’s your first house or apartment, or a vacation home, or your fifth investment property in your blossoming portfolio, is always exciting and a little bit stressful. There are so many details to think about as you are negotiating the purchase with the help of your broker and attorney. One very important aspect that is often overlooked – or not given sufficient thought during the process – is exactly how you should take title to your new acquisition.

There are, at least, two separate factors to think about that I’ll discuss, either or both of which might be relevant considerations in your situation.

First: Exactly who is buying the property and how should they hold it? If you are purchasing it on your own, then titling is simple — it will be in your individual name, unless you opt for a different form of ownership, as discussed below. If you are buying the home with one or more other persons, you will be fractional owners, and you will need to decide how you wish to hold title together. There are two basic forms of joint ownership: tenants in common (TIC) and joint tenants with right of survivorship (JTWROS). These words or letters are written on the deed (or shares/lease if a cooperative apartment or unit) following the names of the owners.

JTWOS — the co-owners, whether spouses or not, must take title at the same time and in the same document and must have an equal interest in the property and equal right to use it. If one of the owners sells his interest, or if it is attached by a creditor, then the form of ownership converts to TIC. There is a special form of JTWOS in many states for ownership by spouses called tenancy by the entireties. This has the same survivorship feature, but it differs from JTWOS between unmarried persons in that one spouse cannot sell or transfer the property without the consent of the other, and creditors can only generally attach the property for the joint debts of the couple, not of only one of them.

TIC — the co-owners, in whatever percentages they assume their ownership, which can be equal or unequal, can dispose of their portion of the property in life or at their death as they wish. It does NOT pass automatically to the co-owner; it is an asset that passes under your Will. You can also have more than two persons owning together as tenants in common. Who owns what percentage, as well how the property will be used and maintained, should ideally be documented in a joint ownership agreement.

Bear in mind, if you acquire property in joint names and don’t note how you intend to take to title, in New York, if the takers are married the presumption is tenancy by the entireties, and if they are not married the presumption is TIC. The smart move is to be explicit and clear about your intentions.

Second: Should you own the property in your individual name, a trust or another entity?   Entire books can be written on this topic, so some quick thoughts are in order. Many people buy properties other than in their own name for reasons related to privacy, estate planning, ease of joint management, etc. If you don’t want your name to appear in the East Hampton Star in the real estate transfers, you can buy in the name of a corporation, partnership, or trust. These structures not only afford privacy, they can also be very useful in estate planning to pass assets to younger generations or other beneficiaries in the most tax efficient manner possible — portions of a property can be given to children or grandchildren over a number of years with the benefit of gift tax annual exclusions and valuation discounts.

Furthermore, if you own real property in various states in your own name or as TIC, at your death your Will must be probated in each jurisdiction to pass title; therefore, use of a revocable trust or ownership in an LLC or LLP form, for instance, will make administration of your estate more efficient. JTWOS also helps here. Often a beach house is a compound where many members of an extended clan gather. Commonly, a family wishes to maintain and enjoy the home over generations. Ownership by a trust or other entity can facilitate such long-term, multiple owner scenarios by providing a formal structure and continuity and detailing important aspects of common ownership such as use, maintenance and further transfer of the beloved homestead.

Of course, if you are going to take title in the name of trust, a limited liability corporation or partnership, that entity must be created and in place by the time you sign a contract; or, if not yet in place, be sure that you permit assignment of the contract and then get the entity created prior to closing on the property.

The Bottom line: Don’t let the exhilaration of buying that city chateau or seaside oasis blind you to the important details involved in its ownership down the line. Start with who is buying it and how are they going to hold it thereafter. Title can always be changed later, but focus at the acquisition for a smooth beginning.


Glenn M. Troost, is a trusts and estates attorney admitted to practice in New York, with offices in East Hampton and Manhattan.

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