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CHAPTER 3. TYPES OF OWNERSHIP

Owning Real Property Individually
Any legally existing person may own real property. Remember, a person is defined in most laws as individuals AND business organizations, and sometimes even trusts or other types of entities. The phrase natural person is used to distinguish individuals from artificial entities, such as business organizations.

Over the years, laws have changed to allow these artificial entities to own real property. Today, property may be owned by one individual, one company, one trustee, or multiple individuals, companies, or trustees at the same time. Property may be owned in any combination – for example, an individual might own property with a business as the other owner. The requirements and rules for ownership depend on who or what owns the property, and what type of ownership and what type of interest that person owns.

Owning Real Property with Others (Co-Ownership)
Co-ownership is when more than one person owns the same property. It is not like saying “you own the north half and I own the south half” because that statement says that you and I do not own the same property. Co-ownership of property means you share ownership of the same property in some way. Tenants in common, tenants by the entirety, and joint tenants with right of survivorship are examples of co-ownership.

In the drawing on the left, there is no co-ownership; no one owns property with anyone else. In the drawing on the right, four people own one parcel of property.

Tenants in common
Ownership of property as a tenancy in common means each owner owns his or her interest separately from the other owner(s), yet they still have an interest in the same property. No unities of title are required to create a tenancy in common and there is no right of survivorship (more on right of survivorship under Tenants by the Entirety).

Unities of title means co-owners acquire title to property: (1) in the same type of ownership interest, (2) in the same amount of ownership interest, (3) at the same time, and (4) by the same conveyance document. A tenancy in common may be created without any of these unities of title. Tenants in common may buy their ownership interests at different times, using different conveyance documents. The ownership interests may be different – for example, one party might own 75% of the property and the other party own 25%. One tenant in common may purchase an individual fee simple interest while another tenant in common may purchase an interest with

several other co-owners, or as a business or a trust. One tenant in common may sell or mortgage his or her interest separately from any other owner, without the other owner(s) even knowing about the sale or mortgage.

A very important aspect to a tenancy in common is that there is no right of survivorship, so an owner’s interest may be devised in a will. The surviving owners do not automatically inherit the deceased tenant-in-common’s interest.

Tenants by the Entirety(ies)
When a husband and wife take title to real property together in Florida, they own the property as a tenancy by the entirety (you may also see it called tenancy by the entireties). A tenancy by the entirety is only available for married persons in Florida.

There is no requirement that a husband and wife buy property together; a husband may own property individually, just as a wife may own property individually. A tenancy by the entirety occurs when both husband and wife take title to the same parcel of land together, at the same time. It only occurs when four “unities of title” exist. This means that the husband and wife must have taken title at the same time, that their type and quantity of ownership interests are the same, and that they received title in the same document. Although their marital status should be stated in the conveyance document, it is not required to establish a tenancy by the entirety in Florida.1

Tenants in common may have distinct and separate interests in the property. Tenants by the entirety and joint tenants with right of survivorship share ownership of 100% of the property, often referred to as owning an undivided interest in the whole.

One very special characteristic of a tenancy by the entirety is the right of survivorship. A right of survivorship means a survivor takes title automatically upon the death of a property owner. We have already seen one example of a right of survivorship arrangement – the life estate and remainder interests discussed in Chapter 2. The remainder interest holder takes title as soon as the life estate terminates.

Other right of survivorship situations include life insurance beneficiaries who receive the life insurance policy proceeds upon the death of the policy owner. Bank accounts labeled as Transfer On Death accounts provide that the property in the accounts transfer immediately upon the death of the account holder.

The Florida legislature decided that, when a husband and wife purchase property together, they would want the surviving spouse to receive the property when one spouse died. Therefore, a right of survivorship is automatically included in a tenancy by the entirety in Florida.

If spouses purchase property together, but do NOT wish the surviving spouse to automatically inherit the deceased spouse’s interest, they need to clearly specify this desire in the language in the deed when they take title. This automatic right of survivorship result may not be what the spouses wish. Spouses in a second marriage may wish their children from their first marriages to inherit their interests. If so, they need to insert special language in the deed conveying the property to them when they first purchased the property. For example, the deed might state that the spouses are purchasing the property “as tenants in common and not as tenants by the entirety.” If a tenancy by the entirety is NOT desired, the conveyance document must clearlystate that the grantees are NOT taking title as tenants by the entirety because, even if the grantees’ marital status is not included on a deed, if they are married, a tenancy by the entirety will be presumed.

The Florida Bar’s Uniform Title Standard 6.6 says that a tenancy by the entirety may be presumed to continue if a husband and wife took title and no evidence of a dissolution of marriage has been recorded. For example, let’s say a husband and wife took title together in 1998, creating a tenancy by the entirety. In 2002, the husband died and his death certificate was recorded. Now, the wife wants to sell the property. Is that okay? Yes. You may presume that she owns the property, by right of survivorship,

IF she and her husband had remained married the entire time from when they took title in 1998 through the date of his death. Of course, you do not know this to be true, so you will want her to sign an affidavit stating these facts as true.

What if a couple divorces and then remarries? Sorry. The original tenancy by the entirety terminated with the divorce. They will have to convey the property to themselves as husband and wife again to recreate the tenancy by the entirety.

Joint Tenants with Right of Survivorship
Conversely, the Florida legislature decided that, when persons who are not married to each other purchase property together, one property owner would NOT want the surviving property owner(s) to inherit the deceased property owner’s interest. Therefore, a right of survivorship is NOT automatically included when non-married persons purchase property together.

If non-married property owners want a right of survivorship to be included when they obtain property together in Florida, they must state this desire in the language in the deed when they take title to the property. The commonly accepted and recommended language is to say that they are purchasing the property as “Joint Tenants with Right of Survivorship.”

What about this situation? A married couple purchased property with another married couple! Now, what?