10A — October 11 - 24, 2019 — Multifamily Financing — M id A tlantic
Real Estate Journal
www.marej.com
Insurance/Title
By Bill Parker, Esq., Conestoga Title Insurance Co. Be Invested in How It’s Vested
T
now may avoid unintended consequences down the road. Homebuyers should be made aware that there are several op- tions, and the best one depends on the facts, circumstances and goals of the buyers. You, as the title agent, should make the homebuyer aware that there are various titling options. Attorney agents should discuss the clients’ reasons for buying and what the fu- ture may hold for them. For example, a common scenario is a young couple buying real property BEFORE they are married. Assuming that they
do get married will they need a change in the title? What hap- pens to the interest of each in the event the marriage does not take place? Answers to these questions and more depend on the method of taking title. Here are the basics: What is a title? A property title is the bundle of rights that dictates who has legal or equitable interest in the property. What are the different ways to hold a title? Although title rules vary from state to state, generally all states recognize the follow-
ing most common forms of title: Sole ownership As the name suggests, sole ownership property is titled in the name of only one person. Joint tenancy with the right of survivorship Where two or more individu- als are purchasing property together, each person owns an equal portion of the property and each has an equal right to possess the property. Under joint tenancy, if one person dies, the other owner or owners generally acquire decedent’s interest in the property without the need for probate.
he average homebuyer has little understand- ing of the consequences
Tenancy in common Under this method, as with a joint tenancy, multiple people may hold title to the prop- erty together, but unlike a joint tenancy, each is able to independently sell her interest, or pass it on to beneficiaries of her choosing after she passes away. You should make the client aware that if she owns a property as a tenant in com- mon and does not have a Will, her share of the property will be distributed based on state probate law. Tenants by entirety Some states allow married couples (and only married cou- ples) to own property via this title method. This method also allows joint ownership of prop- erty, but unlike other methods of joint ownership, tenancy by the entirety gives each spouse an undivided interest in 100% of the property. From a debtor/ creditor standpoint, the marital unit owns the property (not the individual spouses), and therefore creditors can’t lay claim to the property if they’re pursuing a debt that is owed by only one of the spouses. In the event one spouse dies, the other receives full ownership of the property without the need for probate (similar to joint tenancy and unlike tenancy in common). The caveat with this method of holding title, and a difference between it and a joint tenancy, is that one spouse cannot sell his share of the property without consent from the other spouse. In a living trust A trust is an estate planning vehicle that allows passage of one’s property at death to beneficiaries without the need for probate. What to know: if clients mention the desire to title prop- erty in the name of a trust, ad- vise them to seek out a lawyer qualified to draw up the trust. In the event a trust already ex- ists, please review it carefully (or send to your underwriter for review) to ensure that the trust language is adequate and appropriate to accomplish the needs of your clients. These principles are very general and the facts of each case may vary. If you as the title agent have any questions or concerns please contact your underwriter. William J. Parker Esq. is VP of both claims and un- derwriting for Conestoga Title Insurance Co.
of choosing one vesting method over a n o t h e r . Thus, it is i mp o r t a n t for you as the title agent to take a vested interest (pun
Bill Parker
intended) in how the purchase will be titled. Granted, it is not as exciting as designing their new space or going furniture shopping, but the right choice
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