Whether you’re a married couple buying a home together; family members planning to share a vacation home or cottage; or business partners ready to purchase and develop an investment property, it’s important to understand the different ways in which real property may be co-owned here in Michigan.
There are multiple forms of co-ownership for real property in Michigan, each with its own advantages and limitations based on the unique circumstances of the owners.
The four ways to co-own real property are as:
- Tenants in Common
- Joint Tenants
- Joint Tenants with Rights of Survivorship
- Tenants by the Entireties
Importantly, the manner in which you and your co-owners hold title to real property can have significant implications when it comes to estate planning and probate administration. In the event of one owner’s death, each of the four types of co-ownership leave the surviving owners with different rights. Several forms of co-ownership can allow the decedent’s share of the property to transfer to their surviving co-owner(s), without requiring probate.
All four types of co-ownership also have important financial and personal implications — and if the co-owners experience a change in their relationship or one co-owner passes away, it is quite common for property ownership to become a confusing and contentious issue.
Let’s explore each of these ways to jointly hold title to Michigan real estate in more depth:
Tenancy in Common
When individuals own a piece of property as tenants in common, they each own an undivided interest in the property, with an equal right to use the entire property. With exception, tenancy in common is presumed when real property is conveyed to two or more people and there is no reference to whether title is held in common or otherwise
Under tenancy in common, owners have significant flexibility and consultationdom to sell and transfer their ownership interest as they see fit. When one owner dies, their interest will be passed in accordance with Michigan probate laws. This means that each tenant’s share is considered part of their estate when they die. The owner may convey their interest to a loved one through their will, or allow it to pass to their heirs in line with state intestacy laws. There are no rights of survivorship, which means that the other tenants are only entitled to their remaining fractional shares.
As joint tenants, two or more people share ownership of the property, each with an undivided equal interest. Unlike tenants in common, there is a right of survivorship for the other co-owners upon the death of another. This allows the property to be transferred outside of probate upon the death of a co-owner. This benefit can be mitigated if there are more than two co-owners and one sells their interest which will result in all or part of the joint tenancy being severed.
For real property, the conveyance must specifically mention joint tenancy, or tenancy in common is typically presumed. It is important to note that, in Michigan, joint tenancy may function differently for personal property than it does for real property. For the sake of efficiency, this article is focusing on real property. If you have any questions about the specifics of holding title to personal property, such as a financial account or vehicle, do not hesitate to get in touch to discuss the unique variables of your situation.
Joint Tenancy With Full Rights of Survivorship
Joint tenancy with “full rights of survivorship” is a Michigan monster based on case law. Like simple joint tenancy, the surviving co-owners typically receive the property outside of probate upon the death of another co-owner. Unlike standard joint tenancy, even if a co-owner “A” transfers their interest to a third party, upon “A’s” death, that interest transfers to the other co-owners outside of probate.
Tenants by the Entireties
Tenants by the entireties refers to a situation in which a married couple takes joint ownership of a piece of property together. When the co-owners are married, tenancy by the entirety is presumed, and does not necessarily need to be mentioned specifically in the deed or conveyance.
When holding title to property as tenants by the entireties, survivorship rights are granted to each spouse. This means that the surviving co-owner automatically owns the entire property when their spouse passes, without the asset having to go through probate.
Tenancy by the entirety prevents either spouse from conveying or mortgaging their interest in the property without consent of the other. Tenancy by the entirety also offers some unique financial advantages to married couples. Most importantly, creditors for debts that are solely owned by one spouse cannot put a judgment on real property held by spouses as tenants by the entirety. However, a creditor can levy judgment on the property if both spouses are liable for the same debt.
Looking for Guidance from an Experienced Michigan Probate Attorney?
Have any more questions about joint tenancy, tenancy by the entirety, or tenancy in common? Curious about any other aspect of estate planning or probate litigation in Michigan?
If you are currently dealing with the legal aftermath following the passing of a loved one, Attorney Dean Patrick can provide the assistance and support that you need as an estate is guided through the Michigan probate courts.
At the Patrick & Associates, PLLC., we put our legal experience and skills together with our commitment to excellence in representing your rights. You can depend on our law firm’s ability to listen to you and our talent for creative strategies as we help you navigate all matters relating to probate, including (but not limited to) general probate litigation, wills and trusts contests, beneficiary disputes, guardianships, and conservatorships. Work with us and you have our sincere promise to carefully plan and manage each step of your legal matter from start to finish.
Have any more questions? Ready to get started? Contact Dean E. Patrick at his Southfield office at (248) 663-2566, or click here to learn more or arrange your consultation initial consultation. Our staff is available 24/7 to answer any questions and help you with your legal matters.