The most common way for legally married spouses to hold ownership rights to their property is by ‘Joint Tenancy’ (AKA ‘joint tenants with a right of survivorship’). Both spouses own equal shares of the property. If one spouse dies, the remaining spouse continues as the sole owner, with no probate necessary.
Other ways to use Joint Tenancy
But joint tenancy isn’t only available to married couples. Any couple, parents and children, even total strangers can be joint tenants (equal owners) with a right of survivorship.
That makes joint tenancy handy in a variety of situations, such as when one buyer is not able to qualify for a mortgage on their own due to poor credit, a lower income, or higher income-to-debt ratio. The better-qualified buyer helps get the loan approved, but the less-qualified buyer will likely bring the terms down a bit.
Joint tenancy is also useful for parents who want to give an adult child down payment money, but want to stay on the loan in case they need to take it over to protect their investment.
Dissolving the Joint Tenancy
A joint tenancy can be converted to separate ownership, called ‘tenants in common’. In the case of divorce, or some other agreement among the owners, ownership shares of the property can be separated. Any one party of the ‘tenants in common’ ownership can sell their portion or even deed it to their own heirs.
If you’re considering joint tenancy with a non-spouse, you’ll want to give this some serious thought or perhaps consult with a real estate lawyer before you get too far along with your plans.