Legal Articles

Vesting of Title

The language on the deed determines the the legal rights of the parties that own the property. The rights that may be affected by the way in which you acquire property include: inheritance, income taxes, gift taxes, ability to transfer the property, exposure to creditors, and real property tax exemptions. The common methods of holding title are sole ownership, co-ownership, and corporate ownership.

Sole ownership means acquiring title in your individual name. This is simple if you are a single person as you take full ownership. If you are married, then it may be important to include language that the property is being taken as one spouse's “sole and separate property” on the deed. Under Florida law, your spouse can have rights over any property you acquire while married so you need to be careful if you are intending to have sole ownership over newly purchased real estate. Your spouse will have to sign a document surrendering any future claims to the property.

Co-ownership means property owned by two or more persons. If you are married, then recording title as husband and wife creates a tenancy by the entirety. This means that the real estate property will pass tax free upon inheritance to the other spouse. There are also statutes that protect property held as tenancy by the entirety from creditors. Only married couples can enter into a tenancy by the entirety. This is the most common choice for married couples holding property. Any two or more people can enter a joint tenancy when buying property. To create a joint tenancy with rights of survivorship it is a good idea to include the language “as joint tenants with rights of survivorship” in the deed. In fact its a requirement that title is acquired at the same time, by the same conveyance, all participants have an equal interest, and the document must expressly declare the intention to create a joint tenancy estate. When one title owner dies in a joint tenancy, the property rights are distributed equally among the remaining title holders. To create a tenancy in common include the language “as tenants in common” in the deed. Any two or more people can enter a tenancy in common when buying property. If you intend for the property to pass separately under your will, it is important to vest title as a tenancy in common. Each party can sell their interest separately. Parties can also have unequal ownership under this arrangement.

In Florida, you can also take title to real estate in the name of a corporation, company, partnership, or trust (specific purpose entities). Taking a property under a specific purpose entity is a good way to protect an individual from business debts and liabilities. Specific purpose entities can continue after the death of an owner or manager. It is important to consult with an attorney to determine all legal consequences of using a specific purpose entity.

Posted at April 13, 2013, 8:20 p.m.