- Home
- Departments
- Assessing
- Forms of Ownership
Forms of Ownership
Single Ownership
A single owner may hold title to property, without any other person or entity sharing ownership. The property tax is assessed to the sole owner.
Multiple Ownership
More than one person or entity may hold title to property as multiple co-owners. Co-owners have concurrent interests – interest in the same property at the same time. They are jointly and severally liable for the tax assessed on property they own. This means that the community can assess or collect the tax from all or any one of the co-owners. Assessors must assess property taxes in the full name of at least one of the multiple owners of record and then should include as many other owners as their billing system allows.
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.
Death of Owner
A death of record is when a death certificate for a deceased owner is recorded in the registry of deeds or when a petition for probate is filed in the probate court regarding the estate of a deceased owner. Unless there is a death of record, a property tax assessment to the record owner of real estate is valid.
Example: A deed to Ed from Dan of Greenacre was recorded in 1978. According to the town clerk, Ed died in 2005. No death certificate has been recorded at the registry of deeds and no petition for probate regarding Ed’s estate has been filed in the registry of probate. Because there is no “death of record” of Ed, Ed is still the record owner of Greenacre. An assessment of property taxes to Ed, even though Ed is deceased, is valid.
When a sole owner dies, the owner’s interest passes to the deceased owner’s heirs or devisees under the sole owner’s will. If there is not a “death of record” for the deceased sole owner, assessors should continue to assess property taxes to the deceased sole owner even if it is known that the person is deceased because he or she is still the record owner of the property. Once there is a “death of record,” an assessment to the deceased sole owner will be invalid. Assessors must look to the records of the probate court found in the registry of probate to determine the identity of the new record owner.
Example: Ann is sole owner of Blackacre. Ann dies, but there is no death certificate recorded in the registry of deeds or probate filing in the registry of probate regarding Ann’s death. Ann is still the record owner of Blackacre and assessors should continue to assess property taxes to Ann even though she is deceased. Once a death certificate or probate filing regarding Ann’s death is filed in the registry of deeds or probate, then an assessment to Ann will be invalid because Ann is no longer a record owner of the property because of her “death of record.” The assessors must look to the records of the probate court found in the registry of probate to determine the identity of the new record owner. If the identity of the new owner is not included in those records, then assessors should assess to the “Heirs or Devisees of Ann.”
When a tenant in common dies, the interest of the deceased tenant in common passes to the deceased tenant-in-common’s heirs or devisees under the deceased tenant-in-common’s will. The interest does not pass to surviving tenants in common because there is no right of survivorship in a tenancy in common.
If there is not a “death of record” for the deceased tenant in common, assessors may continue to assess property taxes to the deceased tenant in common even if the person is deceased because he or she is still the record owner of the property.
However, if there are other tenants in common of record who are living, then, instead of continuing to assess the deceased tenant in common, assessors may assess one or more of the living tenants in common because a community can assess or collect property taxes from any one or all of the record tenants in common. Once there is a “death of record” of a tenant in common, however, an assessment to just the deceased tenant in common will be invalid.
Example: Ann and Dan are record owners of Blackacre and hold title as tenants in common. The assessors may assess taxes for the property to either of the two co-owners or both. They may assess the tax to Ann alone or Dan alone or to both Ann and Dan. Ann dies, but there is no death certificate recorded in the registry of deeds or probate filing in the registry of probate regarding Ann’s death. Assessors may still assess Ann or Dan or both Ann and Dan because they are both still owners of record.
If, however, a death certificate or probate filing regarding Ann’s death is filed in the registry of deeds or probate, then an assessment of property tax to Ann alone will be invalid because Ann is no longer a record owner of the property because of her “death of record.” Assessors may assess the property tax to Dan as he is still a record owner tenant in common. Assessor must look to the records of the probate court found in the registry of probate to determine the identity of the new record owner of Ann's property interest.
In a joint tenancy and tenancy by the entirety, there is a right of survivorship and the property interest of a joint tenant or tenant by the entirety who dies passes automatically by operation of law to the surviving joint tenant(s) or tenant by the entirety. In joint tenancies and tenancies by the entirety, assessors must assess the property tax in the full name of at least one of the multiple co-owners of record.
If a joint tenant or tenant by the entirety dies and leaves a surviving joint tenant or tenant by the entirety, but no death of record relating to the decedent has been filed in the registry of deeds or probate, assessors have three options. They may: (1) continue to assess the deceased joint tenant or tenant by the entirety because there has been no “death of record,” (2) may assess only the surviving joint tenant or tenant by the entirety as a co-owner of record of the property or (3) may assess both the deceased joint tenant or tenant by the entirety and the surviving joint tenant or tenant by the entirety as they are both owners of record of the property. Once there is a “death of record” of a joint tenant or a tenant by entirety, however, an assessment to only the deceased joint tenant or tenant by the entirety is no longer valid.
Example: Ann and Dan are record owners of Blackacre and hold title as joint tenants. The assessors may assess property taxes to either of the two co-owners or both. They may assess Ann alone or Dan alone or both Ann and Dan. Ann dies and her interest passes automatically by operation of law to Dan, the surviving joint tenant. But there is no death certificate recorded in the registry of deeds or probate filing in the registry of probate regarding Ann’s death. Assessors may still assess Ann or Dan or both Ann and Dan because they are both still owners of record. If, however, a death certificate or probate filing regarding Ann’s death is filed in the registry of deeds or probate, then assessors may only assess to Dan. An assessment to Ann alone will no longer be valid because Ann is no longer a record owner of the property because of her “death of record.”
A life tenant holds present possessory interest in the property for his lifetime and is assessed owner for property tax purposes. The remainderman holds a future, remainder interest and the right to possession is delayed until the death of the life tenant.
On a death of the life tenant, the remainder interest, automatically by operation of law, becomes a present possessory interest and the remainderman becomes the actual owner of the property. Upon the recording of the death certificate of the life tenant in the registry of deeds or a probate filing in the probate court, the remainderman becomes the record owner for property tax assessment purposes.
Example: In 2015, Ann gave a deed to Barbara of Greenacre, reserving a life estate to herself (Ann). Ann is the life tenant and Barbara is the remainderman. Ann dies and her death certificate is recorded at the registry of deeds. Ann is no longer the record owner of the property, Barbara is. Property taxes are now assessed to Barbara.