Real Property Ownership Types

• There are 3 ways ownership can be held: in severalty, co-ownership, and in trust.

Ownership in Severalty

• One owner holds the title, such as a person, corporation, or LLC.
• The owner possesses all the legal rights associated with the property.

Co-Ownership Types

• Two or more individuals or entities hold title as tenants in common.
• Different types of co-ops exist, each with specific legal rights.
• Each holder's share becomes part of their probate estate upon death, unless there's a right of survivorship.

Right of Survivorship

• Avoids probate, with the deceased's interest automatically transferring to the other owners.
• Applies in joint tenancy, tenancy by the entirety, and community property arrangements.

Tenancy in Common (TIC)

• Features unity of possession.
• Ownership interest can be divided into equal or unequal shares.
• Each share is owned separately, not the property.
• No survivorship rights; interests pass to estates or heirs, not other owners.
• Allows owners to sell, convey, or transfer their share of interest without the consent of others.
• Death of a tenant in common can cause probate issues, potentially costing time and money to resolve.
• In community property states, both spouses have equal ownership and need each other's consent to transfer. These states include UT, CA, AZ and TX.
• Common law states generally don’t require spousal consent, except in cases of tenancy by entirety.
• All TIC parties can sell their interests to one corporation, which then becomes the owner in severalty.

Joint Tenancy

• Involves two or more owners with right of survivorship.
• Requires PITT: Possession, Interest, Time, and Title.
• All joint tenants have equal shares and the right to possess the property.
• Tenancy and title are conveyed at the same time on the deed.
• Requires the consent of all joint tenants.
• Death can be resolved with an affidavit and death certificate.
• Becomes ownership in severalty if only one joint tenant remains.
• If a joint tenant sells their interest, the new tenant becomes a tenant in common, while the remaining joint tenants retain survivorship rights.
• If only one joint tenant remains, it becomes a TIC by default.

Timeshare

• Each owner is allotted a specific time slot of ownership.

Condominium

• Similar to a Planned Unit Development (PUD).
• Title is held to the unit/airspace, not the structure itself.
• The structure is owned by an association.
• If there are 100 units, each owner has a 1/100 interest in the common areas.

Planned Unit Development (PUD)

• Characterized by high density.
• Owners possess the footprint of the real estate under their units, which usually touch the ground.
• Owners have an easement to common areas, but do not own a 1/100th undivided interest
• Benefits include competent site design, open space, cost-effectiveness for street construction and utility extension, and lower maintenance costs for the municipality.

Ownership in Trust

• A trustor transfers assets to a trustee to hold and manage for a beneficiary.
• Assets held in trust avoid probate.
• All parties involved can be people or entities, depending on the trust type and purpose.

Trust Assets

• Can include real property, deposit accounts, investments like stocks and bonds, life insurance policies, and business interests.

Trustor

• Also known as the grantor, the party who creates the trust and contributes assets to it.

Trustee

• Can be an attorney or title company, manages the title of property for the beneficiary.
• Administers the trust only as legally specified.
• The trustor is often the trustee in living trusts.
• Appointed by the trustor; if the trustor dies, the trust names successor trustees.
• Manages bank accounts, supervises rental property, communicates with tenants, oversees repairs, insurance, inspections, and can sell or mortgage as necessary for the beneficiary.

Beneficiary

• The entity benefiting from the trust, which can be a charity, organization, corporation, trust, will, life insurance policy, or LENDOR.

Revocable Trust

• Allows the trustor to undo, cancel, revoke, change the trust, take assets back out, or modify its terms through a trust amendment.
• Becomes irrevocable after the trustor dies or at another specified point in time.

Irrevocable Trust

• Once assets are placed in the trust, they cannot be taken back.
• For example, a commercial building could be placed in an irrevocable trust to benefit a scholarship fund for descendants' college tuition.

Living Trust

• Created while the trustor is alive.

Land Trust

• The beneficiary can only hold real estate, not other types of assets.
• The trustee has less power.
• Revocable for privacy and protection against liens/judgments because it is held in the trust's name, not the owner's.

Family Trust

• Intended for various assets.
• The trustee has more control.
• Revocable.

Testamentary Trust

• Set up after death from the trustor's will.

Real Estate Investment Trust (REIT)

• An investment vehicle where investors buy certificates of the trust itself, not the title.
• Investors are buying ownership in the company that owns the property, not directly in the property.
• Provides tax advantages.
• In a corporation, partners' personal assets are protected from lawsuits brought against the corporation; only corporate assets are at risk, not the company's owners' assets.