Real Estate Documentations

Importance of real estate documentations

Land investment involves a huge amount of money. Losing it, for whatever cause and reason, would be such an unfortunate thing. Sadly, the reality is that these things really happen all the time. In fact, it happens even to the best and popular people. Abraham Lincoln, for one, reportedly lost his house (not once, but twice!) simply because of not having a clear title to the property. When you want to invest in real property, you need to be aware of the fact that you will have to deal with a lot of paperwork and documentation, all of which are very important to establish ownership and to cover certain agreements with sellers and other third parties. As such, you are greatly encouraged to be familiar and gain clear understanding of all these documents.

However, if there’s one piece of paper that holds importance in real estate deals, that would have to be the deed. The deed is a form of real estate document that conveys title of one property from one party to another. This is the same document that Abraham Lincoln didn’t, perhaps, really paid attention to, that’s why he was deprived of its ownership. Every land investment should be covered by a deed; and there are different ways by which you can secure a property title. Declaring ownership of a title would vary depending on the state that governs your property. You can hold title in a joint tenancy, tenancy in common, or tenancy by the entirety.

Joint tenancy

In a joint tenancy form of title ownership, there are two or more persons that jointly own the property. All the parties involved in the ownership enjoy equal rights to the property during their lifetime. In the event of death of any one of the owner or owners, there is a provision that the appropriate share is passed on to the surviving tenants. This goes on until only a single tenant remains who, then, takes custody of the full title. This is an ideal arrangement if several persons want to get into land investment and become partners on the transaction. If any of these partners die, title shall be conveyed to the remaining partners automatically. In a joint tenancy, title cannot be conveyed to one’s heirs, and cannot be sold or made use as a collateral without explicit content of the other tenants. If one party or tenant wants to get out of the partnership and surrender his part of the title, this should be done via a court petition. The court may decide to accordingly divide the property or offer it in the market for sale.

Tenancy in common

Like in a joint tenancy, there are two or more owners of a title in a tenancy in common. Although they have vested equal rights to the property, each one can hold different interests in the land investment. Unless otherwise specified, each one is assumed to enjoy equal shares to the property.  Each of the owners has the right to sell his share of the property without consent of the other tenants. Each one may also use his share as a collateral to secure a loan or mortgage. Should he wish to do so, he may dispose of his share by will and leave it to his heirs as inheritance. In most states, and in the absence of any provision, the law presumes that a deed is under tenancy in common. Therefore, in the demise of any one partner or tenant, his share automatically passes on to his heirs and not to the surviving tenants.

Tenancy by the entirety

Tenancy by the entirety is only applicable in the case of married couples. Husband and wife are the joint owners in this form of property title and operate on the basic premise that in the event of death of one partner, the surviving spouse automatically gets the share. In tenancy by the entirety, not one partner is allowed to leave his or her share of the property to another person as ownership transfer to the surviving spouse automatically and without any need for will or probate. This form of ownership is based on the ancient theory that considers married couples as only one entity. Transfer of ownership to a third party cannot be made possible without the consent of the other spouse. In case of divorce, the title reverts to a tenancy in common form.