METHODS OF OWNERSHIP
- Sole ownership.
- Ownership is separate and apart from the interest of any other person.
- Tenancy In Common
- Joint Tenancy
- Tenancy by the Entirety
Tenancy In Common
- Ownership held my tow or more people.
- No right of survivorship.
- Holds an estate by separate and distinct title.
- No exclusive possession.
- Any party is free to sell interest.
- Mortgage of one party is only a lien on mortgagor's interest.
- Interest with survivorship rights.
- Cannot be passed to heirs of a descendant due to survivorship rights.
- Can only be created through direct action of the parties on the deed.
- Requires the Four Unities.
- Can mortgage interest but foreclosure severs joint tenancy.
- A tenant may sell but it will break the joint tenancy.
- A will by one tenant does not break a joint tenancy due to the right of survivorship.
- An easement does not break a joint tenancy but dies with the with the joint tenant granting it.
- Partition is the legal proceedings by which an estate held by tenants in common or joint tenants break their estates and title in severalty given to each of the previous owners.
- Legal action to enforce the claims of a creditor must be instituted during the lifetime of the debtor-joint tenant. After death, creditors lose their rights because any surviving owners take the property free from claims.
4 Unities of Ownership
- Time: title must be taken at the same time.
- Title: tenants acquire their interests by way of the same title.
- Interest: must have equal ownership interests.
- Possession: tenants are entitled to the same undivided possession of the entire property.
Tenancy by the Entirety
- Same as Joint Tenancy except the owners must be husband and wife.
- A creditor of one spouse cannot force the sale of the property.
- A creditor of both spouses can force the sale of the property.
- Neither spouse can alter the ownership rights of the other WITHOUT CONSENT.
- Survivorship CANNOT be defeated.
- Automatically created when a deed is convery to husband and wife.
- Inter Vivos Trusts are established during the lifetime of the trustor.
- Testamentary Trusts are set up by will and effective upon the death of the trustor
OWNERSHIP BY BUSINESS ENTITIES
- Unlimited liability
- Perpetual existance.
- Double taxation
- Functions like a C-Corp.
- Taxed like a partnership.
- Shareholders can deduct corporate losses on individual returns.
Limited Liability Corporation
- Each member is an agent for the company.
- Any member can encumber the LLC.
- General Partnership: all members participate.
- Limited Partnership: limited partners are passive.
- LPs cannot bind partnership.
- Loss limited to investment.
- Uniform Partnership Act: If title is taken in the partnerships name (rather than in name of partners), it is called a Tenancy in Partnership.
- Upon the death of a partner, his interests will go to the surviving members or the partnership dissolves.
- Heirs have no rights or interests in the property.
- Not a true legal ownershhip.
- May take the form of a joint tenancy, general or limited partnership, joint venture or corporation.
- Tenants in Common ownership is most common where investors by shares of real estate directly rather than shares of stock.
- Treated as securities.
- Must have 100 investors.
- Must be unincorporated.
- Must distribute 90% of income earned.
- 75% of income must be passive.
- No 5 persons can own more than 50% of title.
- Simply an agreement to invest.
- Usually formed for large scal projects.
- Treated similar to general partnership for tax purposes.
- Parties have no intention to continue relationship when project is completed - the company ceases to exist.
OTHER FORMS OF OWNERSHIP
- Cooperative Apartments (Co-Ops)
- Horizontal Property Act of 1963: authorized creation.
- Condominium Act of 1969: authorized regulation of condos.
- All owners as Tenants In Common normally own the common areas.
- Title is conveyed to both the unit and common areas.
- Taxes are assessed by each unit separately.
- Each unit receives title insurance.
- Owners are responsible for providing property and casualty insurance for their unit.
- Insurance coverage fo the common areas is provided by the association.
Creating a Condominium
Planned Real Estate Development Full Disclosure Act
- Master Deed:
- All owners of the fee simple estate must execute the master deed.
- Condominium Map
Cooperative Apartments (Co-op)
- Corporation holds title and leases the property to shareholders.
- Lease holders sign a Subscription Agreement for stock and receive a Proprietary Lease.
- Shareholders can deduct moretgage interest and real estate taxes for income tax purposes.
- Shareholders are responsible for the payment of all expenses for the entire building.
- Shareholder's right or interest in the co-op is considered to be personal property since he owns a share of stock and has a leasehold interest.
- Equivalent to fee ownership.
- The New Jersey Real Estate Timeshare Act regulates timeshare offerings in and out-of-state.