How To Take Title To Your Home

By Lorne Shuman:

Once you have decided to purchase a home, you will be faced with important decisions that will have an impact on your estate for a long time. Understanding the importance of how to take “title” (or ownership) to your property is one important aspect of estate planning.  In the event of your death, it will also help your beneficiaries administer with more certainty your affairs pertaining to your property. This article discusses the different ways of taking title to your home and the implications of each choice.

Once you have finalized the offer to purchase and have hired a lawyer to close the deal, you will need to decide how you are going to take title to the property. Specifically, you will need to instruct your lawyer regarding the form of ownership that you want. Essentially, the decision will boil down to two distinct choices. Whatever choice you make will be clearly stated on the Transfer to your home.

If more than one person will reside in the home, you can choose to take title to the property as joint tenants or as tenants in common. Often times, spouses take title as joint tenants. Simply put, this means that upon the death of one of the joint tenants (for example, the husband), the surviving joint tenant (the wife) becomes the sole and absolute owner of the property. Not only spouses can take title as joint tenants. If two sisters, for example, are purchasing a home, they too can take title as joint tenants. Upon the death of one sister, the other sister automatically becomes the owner of the property. An important point to remember, however, is that if you take title as joint tenants, whatever is in your will concerning the disposition of the property becomes ineffective. That is, upon the death of one of the joint tenants, the property is automatically transferred to the surviving joint tenant, regardless of what the will of the deceased says about how the property is to be treated.

Your second choice in terms of how you may take title is to take title as tenants in common. If two people take title as tenants in common, this gives them the option of specifying the percentage of ownership attributed to each owner. Let’s say that two brothers, Fred and Barney, are purchasing a home and it is decided that Fred will contribute 75% of the purchase price and upkeep of the home and that Barney will contribute 25%. In this case, it may make more sense for the brothers to take title as tenants in common. Fred would take title to a 75% interest in the home and Barney would take title to a 25% interest in the home. When people take title as tenants in common, their wills shall determine how their respective shares are to be distributed. Accordingly, upon Fred’s death, his will would determine how his 75% interest in the home ought to be distributed. This is unlike a joint tenancy, where the property would be transferred automatically without reference to the will.

How you choose to take title to your home is an important matter that you should first discuss with your lawyer as one component of your total estate plan.

Courtesy: Lorne Shuman