Congratulations! Your contract has been accepted by the Sellers and you are ready to go to settlement. But wait, your work is not done. A key decision remains - how will you take title (ownership) to your new property?

How you decide to hold title is important because the form of ownership you choose can have significant consequences relating to ownership interest(s), estate planning, and exposure to creditors. For this reason, it is important to understand your choices to determine the most advantageous form of ownership to meet your specific goals(s) and situation.

One of the many documents you review at closing is the deed. The deed is a document that is filed in the land records in the county where your newly purchased property is located. This deed puts the world on notice that you hold title to, or have ownership of, your newly purchased property. It also specifies how you hold title to that property. 

There are two ways you can own property - on your own, or with others. When you own property by yourself, you are a sole owner, meaning there is only one individual or entity that owns 100% of the property. When you own property with others, in Virginia, there are three ways you can take title to the property. We have outlined these different forms of co-tenancy below. Please note, these are general descriptions and are not intended to be legal advice.

Tenants by the entirety. This form of tenancy is reserved exclusively for married couples. The spouses hold title together. When one spouse passes away, the other gets full title to the property by operation of law, without having to go through the probate process (survivorship). This tenancy also provides asset protection from most creditors with a judgment against only one spouse. When severed by divorce, this tenancy converts to tenancy in common,  thereby dissolving the right of survivorship and protection against creditors’ rights. 

Joint tenants with right of survivorship. For joint tenants with rights of survivorship, an equal, undivided ownership interest is held by all of the grantees (owners) named in the deed. Should a joint owner pass away, their interest goes to the surviving owner(s) in equal shares. The decedent’s interest in the property does not pass to the decedent’s heirs or devisees. This type of tenancy is commonly used by non-spousal family members (for instance, a mother and child) and unmarried partners.

Tenants in common. This form of tenancy is commonly used when a relationship is more business than personal. A good example would be two real estate investors working together. Each tenant in common owns a proportionate undivided interest in the property. It does not have to be in equal shares. The percent interest is specified in the deed (i.e. if Buyer 1 contributes 60% of the down payment and monthly mortgage amounts and Buyer 2 contributes 40%, they may wish to specify they are taking title as 60% to Buyer 1 and 40% to Buyer 2.  The implication of this is that when the property sells, proceeds are distributed according to the ownership percentages, unless the parties agree to a different distribution). Each tenant in common can sell, give or will their interest in the property at any time. This is the default form of tenancy in Virginia if two or more parties hold title to a property and no interest or tenancy is explicitly stated in the deed. The purchasing parties will take title as tenants in common in equal portions. 

It should also be noted that when you own property with others, it can result in (1) loss of control; and (2) exposure to the co-owner’s creditor(s). 

In Virginia, there are many ways of taking title to property. How you decide to hold title can have important implications for ownership interest(s), estate planning, and/or asset protection purposes. For this reason, we recommend that you consult an attorney or call your settlement company to get a clear understanding of your choices to help you determine the most advantageous form of ownership for your specific goal(s) and situation. 

For information on other important decisions to consider when buying a home, check out our Home Purchase 411 Guide available (here).