Forms of Ownership

A tenancy in common is shared ownership where each co-tenant has an undivided interest in the whole property. The interests may be unequal, but each co-owner has a right to the possession, use and enjoyment of the entire property.

This form of ownership allows each co-tenant to transfer his share independently, i.e., co-tenants may acquire and convey their interests at different times. When a co-tenant dies, the co-tenant’s share goes to his or her heirs or devisees rather than to the other co-tenants. There is no right of survivorship.

A joint tenancy is a shared ownership with two distinguishing characteristics. A joint tenancy (1) has a right of survivorship and (2) requires unity of interest, possession, time and title – commonly referred to as the “four unities.”

• When a joint tenant dies, the joint tenant’s share passes to the surviving joint tenants automatically, by operation of law. The last survivor becomes the sole owner.
• Each joint tenant has (1) an equal, undivided interest in the property, (2) an equal right to the possession, use and enjoyment of the entire property, (3) acquired title at the same time and (4) acquired title through the same instrument.
• The intent to create a joint tenancy must be clearly expressed in the deed or will conveying title. Intent is typically expressed by using the words “joint tenants” or “right to survivorship” in the instrument. If the instrument is silent on the type of multiple ownership created or if the instrument is unclear, the law will presume that a tenancy in common has been created.
• Joint tenants can convey their own interests. A conveyance by one joint tenant of his or her share creates a tenancy in common with the other tenants. This is because the grantee of the deed from the joint tenant will not have the “four unities” with the other joint tenants because he has acquired title at another time and through another instrument. The other tenants still hold their interests in the property as joint tenants. 

A tenancy by the entirety is a multiple ownership with two distinguishing characteristics. A tenancy by the entirety (1) may only be held by a married couple and (2) has an indestructible right of survivorship during the marriage.

• A tenancy by the entirety can only be granted to and held by a married couple. A conveyance to two persons who are not married at the time is not a tenancy by the entirety and is not transformed into one by their later marriage. If a marriage ends by divorce, the tenancy also ends by operation of law, and the former spouses become tenants in common.
• A tenancy by the entirety has an indestructible right of survivorship during the marriage. Neither spouse acting alone can defeat the right of the surviving spouse to the entire property. Both spouses must join in a deed to convey the entire property and end the right of the survivor to it.
• Spouses may be able to convey their individual interests, not the other spouse’s survivorship right, depending on when the tenancy was created. If the tenancy by the entirety was created before February 11, 1980, the husband has the exclusive present interest in the possession, use and income of the property during his lifetime, and his future right to the entire property if he survives. He can convey those interests without his wife's consent. The wife has only her future survivorship right. Any conveyance by her is void. For later tenancies, both spouses have co-equal rights in the possession, use and income of the property. Either spouse can convey his or her interest without the other's consent, but still cannot defeat the right of the other spouse to the property if he or she survives.

A trust is a form of ownership that establishes a fiduciary obligation in the person(s) holding legal title to trust assets to use them for the benefit of others. The distinguishing characteristic of a trust is that it divides the ownership into two simultaneous and concurrent interests in the same property: (1) a legal interest and (2) a beneficial interest. A trust may be created by will, deed, or declaration of trust. The property subject to the trust is called the trust corpus and may include real estate, tangible personal property or intangible personal property, such as cash, stocks, or bonds.

Trusts are created for different reasons, including estate planning purposes, to protect property from creditors or to manage the property of a child or person unable to manage his own property.

• The person who creates a trust is called a settlor, grantor, creator or donor. A person who creates a trust by will is a testator.
• The trustee is the fiduciary who holds the legal interest in and title to all trust property for the benefit of the beneficiary. The beneficiary is the person for whose benefit a trust is created; the beneficiary holds the beneficial interest and is entitled to the benefits of the property – rents, profits and income.

Trusts may be described depending on how or why they are created, the trust assets or the relationship of the parties to the trust.

• Creation – A trust created during the lifetime of the settlor is called an inter-vivos trust. A trust created by will is called a testamentary trust. A trust created to protect the beneficiary’s assets from creditors is a spendthrift trust.
• Assets - A realty trust is a trust that contains real estate assets.
• Parties - A family trust is a trust where the trustees and beneficiaries are related. A nominee trust is an arrangement for holding title to real estate under which one or more persons declare they hold the realty as trustees for undisclosed beneficiaries. The trustees have no power to deal with the property except as directed by the beneficiaries.

The trustee is the owner of trust property for property tax purposes. Taxes are assessed to the named trustee: “(Name of Trustee), Trustee, (Name of Trust).” The trustee is usually identified within the text of the declaration of trust or a certificate of trust that may be recorded instead.

Most trusts permit the appointment of additional or successor trustees. A change in the trustee of record affects the title to and record ownership of trust assets, including real estate subject to the trust. A change in the trustee of record is made by the recording of documents showing the resignation or death of a trustee, the appointment of a successor trustee and the acceptance of the position by the new trustee, or a new certificate of trust. When there is a new trustee, taxes should be assessed to the successor trustee of record, by name.

If there is recorded notice that the trustee has resigned or is deceased, but the appointment and acceptance of a successor trustee is not yet on record, taxes should be assessed generally to "Trustee, (Name of Trust)". Taxes should also be assessed to "Trustee, (Name of Trust)" when a trust, not a trustee, is the grantee in a deed and no recorded trust instrument or certificate of trust identifies the identity of the trustee.

A trustee who also has a sufficient beneficial interest in the property is an owner for exemption purposes. A person who is only a trustee or a beneficiary is not entitled to an exemption.  

A life estate is an estate of finite duration. This duration is measured by a specific person’s life (called the measuring life). A life estate creates successive interests in the same property: (1) a present possessory interest and (2) a future remainder interest. The life tenant holds the present interest. The remainderman holds the future, remainder interest. The remainderman has a future right to possession that does not begin until the life estate ends.

• A life estate can be created by deed, will or recorded, lifetime lease. Most commonly, the creator conveys property by deed and expressly reserves a life estate or right to occupy the property for life in the deed.
• A life tenant has a right to the undisturbed possession of the land, including any income and profits.
• A life tenant can convey his or her interest, but not the future right of the remainderman to possession. If the life estate is conveyed, the life estate still ends upon the end of the measuring life.
• A life tenant cannot ordinarily give a mortgage or sell the fee interest but may be granted these powers in the instrument that creates the life estate.
• A life tenant is the owner of the property for property tax assessment and exemption purposes. The life tenant cannot diminish the property’s value to the remainderman and, therefore, must make the ordinary repairs and pay the current expenses expected of a property owner, including annual property taxes.

A leasehold estate is created when the owner of real estate (the landlord or lessor) enters into a lease agreement with a third person(s) or entity(-ies) (the tenant or lessee) granting the tenant the right to possession and use of the leased property for a period of time defined in the lease agreement. The tenant’s right to possession is usually conditioned on the payment of a rental to the landlord. The landlord continues to hold the fee interest and, as owner of the fee, is the owner for property tax assessment and exemption purposes.

There is one exception, however, by statute. If the lease is for 100 years or more, with at least 50 years to run the tenant is treated as the owner of the fee simple estate for all purposes, including the assessment of property taxes. The lease itself or a notice of the lease must be recorded at the registry of deeds to assess such a tenant. This is because a lease for more than seven years is not valid with regard to any person, except the landlord, his heirs and devisees and persons having actual notice of the lease, unless the lease or a notice of the lease is recorded at the registry of deeds where the land is located.  Moreover, as previously stated, property assessments are to the “record owner,” the owner according to the records of the registry of deeds or probate of the county where the land is located.