Title 101

If you’re winding down on a home purchase, it’s easy to think of title insurance as just another line item in an otherwise costly and paper-heavy process.   Trust me when I say, it isn’t.

Title Insurance is coverage that protects buyers and lenders from problems with the ownership to a piece of real estate.  The one-time up front cost is a small price to pay when you consider what is at stake: Title defects, Errors in the Public Records, Unknown Liens, Missing Heirs, Forgeries, Survey or Boundary issues, and that is to just name a few. These issues could lead to expensive legal fees if you end up going to court.  Title Insurance protects against those risks.

Let Burnt Store Title & Escrow guide you seamlessly through the closing process and to protect your most valuable asset- your home.

Title Insurance is a policy issued by an insurance company guaranteeing that the title to a parcel of real property is clear and properly in the name of the title owner, and that the owner has the right to deed the property (convey or sell) to another. Should a problem later arise with the title , the insurance company will pay the damages to the new title holder or secured lender, or take steps to correct the problem.

How should I take ownership of the property I am buying?

This important question is one that Florida real property purchasers ask their real estate, escrow, and title professions every day. Unfortunately, though once thought that these professionals may identify the many methods of owning property, they may not recommend a specific form of ownership, as doing would constitute practicing law.

Because real property has become increasingly more valuable, the question of how parties take ownership of their property has gained greater importance. The form of ownership taken – the vesting of title – will determine who needs to sign documents involving the property and future rights of the parties to the property. These rights involve such matters as:

Real property taxes
Income taxes
Estate taxes
Gift taxes
Transferability of title
Exposure to creditors’ claim

Also, how title is vested can have significant probate implications in the event of death.

Burnt Store Title & Escrow advises those purchasing real property to give careful consideration to the manner in which title will be held. Buyers may wish to consult legal counsel to determine the most advantageous form of ownership for their particular situation, especially in cases of multiple owners of a single property.

Purchasers should consider the following definitions of common vesting as an information overview only. Consumers should not rely on these legal definitions. Purchasers should carefully consider their vesting decision prior to closing, and seek legal counsel should they be unfamiliar with the most suitable ownership choice for their particular situation.

  1. Sole Ownership
    Sole ownership may be described as ownership by an individual
    or
    Other entity capable of acquiring title. Examples of common vestings in
    cases of sole ownership are:

    • A Single Man/Woman
      A man or a woman who has not been legally married. For example: Bruce Buyer, a single man.
    • An Unmarried Man/Woman
      A man or woman who was previously married and is now legally divorced. For example: Sally Seller, an unmarried woman.
  2. Co-Ownership
    • Estate by the Entirety
      A form of vesting title to property acquired by husband and wife during their marriage. This estate is presumed when husband and wife acquire title, unless otherwise specified. Right of survivorship is inherent. Both spouses must join in the same instrument to mortgage or convey property.
    • Joint Tenancy
      A form of vesting title to property owned by two or more persons, who may or may not be married, in equal interest, with the right of survivorship in the surviving joint tenant(s). Title must have been acquired at the same time, by the same conveyance, and the document must expressly declare the intention to create a joint tenancy estate with right of survivorship.
      For example: Bruce Buyer and Barbara Buyer, husband and wife, as joint tenants with rights of survivorship (and not as tenants in common).When a joint tenant dies, title to the property automatically passes by operation of law to the surviving joint tenant(s). Therefore, joint tenancy property is not subject to disposition by will.
    • Tenancy in Common
      A form of vesting title to property owned by any two or more individuals in undivided fractional interests. The fractional interests may be unequal quantity and may arise at different times. Each co-tenant may sell, lease or will to his/her heir that share of the property belonging to him/her. For example: Bruce Buyer, a single man, as to an undivided ¾ interest, and Penny Purchase, a single woman, as to an undivided ¼ interest, as tenants in common.

Other Ways of Vesting Title Include as a:

  1. Corporation
    A corporation is a legal entity, created by statute, consisting of one of more shareholders, but regarded under law as having an existence and personality separate from such shareholders.
  2. Partnership
    A partnership is an association of two or more persons who can carry on business for profit as co-owners, as governed by various partnership statutes such as the Uniform Partnership Act. A partnership may hold title to real property in the name of the partnership.
  3. Trust
    A trust is an arrangement whereby legal title to property is transferred by the grantor to a person called a trustee, to be held and managed by that person for the benefit of the people specified in the trust agreement.

Remember: How title is vested has important legal consequences. You may wish to consult legal council to determine the most advantageous form of ownership for your particular situation.

 

Common Ways of Holding Title to Real Property
Tenancy in Common Joint Tenancy Tenancy by Entirety
Parties Any number of persons (can be husband and wife). Any number of persons (can be husband and wife). Only husband and wife.
Division Ownership can be divided into any number of interests, equal or unequal. Ownership interests cannot be different. Interest must be obtained at the same time. Ownership interest cannot be divided.
Title Each co-owner has a separate title to his undivided interest. There is only one title to the whole property. There is only one title to the whole property.
Possession Equal right of possession. Equal right of possession. Equal right of possession.
Conveyance Each co-owner’s interest may be conveyed separately by its owner. Conveyance by one co-owner (without the others) breaks the joint tenancy. Both co-owners must join in conveyance. Separate interest cannot be conveyed.
Purchasers Purchaser becomes a tenant in common with the other co-owners. Purchaser becomes a tenant in common with the other co-owners. Purchaser must receive deed with both spouse’s signatures.
Death On co-owner’s death, his interest passes by will to his devisees or if no will, then to his or her heirs. No survivorship rights. On co-owner’s death, his interest ends and cannot be willed. Survivor owns the property by survivorship. On co-owner’s death, his interest ends and cannot be willed. Survivor owns the property by survivorship.
Creditor’s Rights Co-owner’s interest may be sold on execution sale to satisfy his creditor. Creditor becomes a tenant in common. Co-owner’s interest may be sold on execution sale to satisfy his creditor. Joint tenancy is broken. Creditor becomes a tenant in common. Co-owner’s interest cannot be seized and sold separately, except by Internal Revenue Services.
Presumption Favored in doubtful Cases (See tenancy by entirety) Right of survivorship must be expressly stated. Not favored. Property acquired by husband and wife is a tenancy by the entirety, unless otherwise stated.