Despite sounding very similar, there are very distinct differences between these three main forms of ownership on a title. The differences can drastically change what creditors, and heirs to the property may be able to obtain from the property in the future.
Tenancy by the Entirety – This is the most common form of title ownership for married couples that are buying a property with the intention to use if for their primary residence. When you choose this form of ownership, creditors trying to collect on the debt of one spouse cannot place a lien on the property owned jointly. Additionally, if one spouse passes away, the other spouse gains full ownership of the property without having to go through probate, which can save considerable costs.
In one example, if one spouse has a credit card with Chase, Chase cannot put a lien on the house for that debt since the lien would impede on the ownership interest of the other spouse. This also becomes a benefit during bankruptcy if there is a lot of equity in the property and only one spouse is filing. With Tenancy in the Entirety, the equity does not make a difference as the bankruptcy court cannot attach to any interest in the house.
Joint Tenancy – Joint Tenancy is usually chosen by close relatives who buy or live in a property together. While the benefits of creditor attachment do not exist, the property does pass to the other titleholder upon death free and clear of any claims against the descendant’s estate without having to go through probate.
- Tenancy in Common – This form of title gives people who each want their divided interest in the property the flexibility to do just that. This is typically used when friends or roommates invest in a property together. Each owner can assign their interest to an individual heir and the full Title to the property does not pass to the surviving individual on the title. Although unusual, Tenancy in Common can also be used by married couples who want this type of flexibility without much concern about protection from creditors.
If you have questions about title ownership discuss your situation with a Chicago real estate attorney. They can help you navigate these differences and determine what type of Title ownership makes the most sense for you in the long term.