Here’s what you need to know about title vesting and which option is right for you.
When it’s time to purchase a property, you may be wondering to yourself, “What is title vesting?” Beyond that, it’s helpful to know the different ways a buyer can hold title to the property and which method of title vesting is right for you.
Simply put, title vesting is the way a buyer holds the title to their property — it means the buyer is taking the official rights to the title. Vested ownership means the individual or individuals own the property in its entirety. There are several options for buyers to take title, and deciding which way of holding title is right for you can be made easier with the help of a trusted real estate attorney.
When purchasing a property, buyers will need to determine how they would like to vest in the home. Here are the common vesting options a buyer may choose from.
The ways to hold vesting
Several considerations play into how you can hold vesting on a property, which is necessary any time more than one individual is listed on the title. Among them, whether you’re married, whether you will co-own the property with another person or people, and whether you own a portion of the property according to what you pay. Depending on your answers to these questions, you can typically hold a title in one of four ways.
The four common ways to hold title
- As a sole owner.
When there is just one owner of the property, no vesting is necessary. The buyer will be the only person listed on the title, hence the sole owner. - Joint tenancy.
Joint tenancy happens when two or more individuals are stakeholders in the property. With joint tenancy, the involved parties can agree that the other will automatically inherit the deceased individual’s interest in the property if one of them passes away. This would be specified as joint tenants with full rights of survivorship and not as tenants in common, which is defined below. - Tenants by the entirety.
This form of tenancy is in place specifically for married partners. Upon the death of a spouse, the interest in the property automatically passes to the surviving spouse under tenants by the entirety. It’s a helpful feature that simply requires proof that the individuals were continuously married from the time they acquired the title until the individual’s death. This type of tenancy can only end under certain circumstances: actions of both individuals, death or divorce. - Tenants in common.
Tenants in common is when two or more people hold title together, and each of the stakeholders has a separate claim to part of the ownership. The ownership amount, or vesting, can be specified by defining the percentage of interest in the property each buyer will hold. If this is not specified, it means the individuals or tenants hold equal amounts of the property.
How a property title is vested depends on your unique needs
When determining how to take title during the purchase of a home or other property, you will want to consider both your financial goals and your need to protect your assets. Rights of survivorship are a serious consideration for most people when investing in a home. Be sure to consult a qualified real estate attorney if you have any questions about title vesting and the most appropriate options for you when purchasing a property.