As you approach the significant milestone of closing on your property, it’s crucial to make informed decisions about the type of tenancy or ownership structure that best suits your needs and circumstances.
Joint Tenancy:
The property is owned equally by each person on title. When any owner dies, their interest passes to the surviving co-owners automatically with no other action required.
Commonly used for co-owners related by blood or in a non-marriage, committed relationships.
Tenancy by the Entirety:
For married couples and couples in a civil union (for a principal residence only). This is similar to joint tenancy with one significant advantage: As long as the owners remain in their relationship and maintain the property as their principal residence, creditors of one spouse cannot force the sale or transfer of the property to collect a debt. (There are some exceptions, such as federal or state tax liens, joint debts, and certain fraudulent transfers.)
Commonly used for a married couple’s primary residence.
Tenancy in Common
Each owner has the right to a share of the property, including all profits and losses on it. (However, each tenant is jointly responsible for the entire mortgage debt and all tax obligations). While each owner can be assigned a specific percentage ownership, the presumption is that each co-owner gets an equal share (unless the ownership percentage are specified in the deed). If one owner dies, his or her share passes to his or her estate according to that owner’s Last Will or Illinois Intestacy Laws, rather than passing to the surviving co-owner.
Commonly used where co-owners are not married or have different descendants.
Ensuring you select the right type of ownership is vital for protecting your interests and achieving your long-term goals.
