My husband and I are buying a house and our real estate attorney asked how the deed should be titled. What are the various choices? How do they differ from title and ownership on bank accounts or other assets?
Real property can be held (titled) in one of three ways: tenants in common, Joint Tenants with Rights of Survivorship, or Tenancy by the Entirety. When a husband and wife are purchasing real property, a real estate attorney often assumes that they are taking title as tenants in entirety.
If a deed is silent as to the method of ownership when spouses take title, the presumption will be that title is as tenants in entirety. Sometimes the deed simply says “as husband and wife,” which reaches the same result. Since the legalization of same-sex marriage in New York in July 2011, and especially since the United States Supreme Court decision recognizing same-sex marriage throughout the country this summer, this also applies to “husband and husband” and “wife and wife;” presumably deeds executed in the future will evolve to simply say “as spouses.”
The impact of a tenancy by the entirety is that each spouse has a right to enjoy 100 percent of the property during his or her life, with the property ownership vesting completely in the surviving spouse upon the death of the first spouse.
For the most part, a joint tenants ownership has the same features as ownership as tenancy by the entirety, except for certain creditor protections that are afforded to a spouse in his or her “homestead” property.
A tenancy in common is when each owner has title to a portion of the property — it can be 50-50 or some other variation of a fractional interest. Its interest is a separate interest in the property; there are no survivorship rights. For example, when two people own real property as tenants in common, each person owns a dividable one-half interest in the property, unless specified otherwise on the deed. Upon the death of the first person, that person’s interest passes through his or her estate (whether by Will or intestacy), and the other person retains only his or her existing share.
All three of these types of ownership also apply when purchasing shares in a co-op as they do to acquiring a condo or a parcel of real property (i.e. a home and the underlying land).
There are pros and cons to all of them. Tenants in entirety affords greater creditor protection to the married couple, but tenants in common affords additional estate planning options that may be available and helpful.
Bank accounts are similar, but can yield different results. Let’s say your parent puts your name on her bank account. The statements say “Mom and Daughter, Joint Tenants with Rights of Survivorship.” When the mom dies, does the daughter automatically receive the remaining proceeds of the account? The answer is that it depends. Section 675 of the Banking Law of New York governs joint bank accounts. If an account is opened as joint tenants and there is some evidence that the depositor acknowledged the survivorship rights in the account, there is a presumption that the depositor intended for the other joint tenant to receive the proceeds at her death.
However, this presumption can be overcome with proof that the depositor was the only one who exercised control over the account during her lifetime, and that the account was titled as joint owners merely for “convenience” purposes. Many older or aging parents put a child’s name on the account out of concern that the child can pay bills if and when the parent is sick or away.
The presumption does not necessarily apply if an account is titled “Joint” or “Joint-Tenants.” And, if the account statement and opening documents simply state two names, such as “Mom, Daughter” or “Mom or Daughter,” those accounts are usually deemed to be tenancies in common.
Oftentimes, a bank representative will simply assume that an account bearing the names of two individuals is a joint tenants account. However, he often neglects to fully explain to the depositor the significant legal distinctions and resulting consequences between these various types of accounts. The depositor also signs various account agreements that are multiple pages of small font and rarely, if ever, take the time to fully read those documents or consult an attorney.
It is always worthwhile to pause and consider the ramifications of the titling of your assets, either when purchasing or selling real property, or simply to do a regular assessment of your liquid accounts, in order to ensure that your true intentions are actually reflected in the titling documents. You should consult with an attorney to analyze the various consequences for your own individual situation.
Alison Arden Besunder is the founding attorney of the law firm of Arden Besunder P.C., You can find her on Twitter @estatetrustplan and on her website at www.besun