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Monday, September 30, 2019

How To Hold Title To Real Estate in Massachusetts

One common estate planning question that homeowners and soon-to-be-homeowners in Massachusetts ask is what is the best way to hold title to their real estate.  In Massachusetts, co-owners who purchase real estate have three choices as to how they take title in the deed: (1) tenants in common; (2) joint tenants; and (3) tenants by the entirety.  Each has its own criteria, and pros and cons that are important when deciding how to purchase your property.

The first way of holding title to real estate in Massachusetts is the default form of title for non-married persons: tenants in common.  If a deed does not specify how the property is held, Massachusetts law automatically holds that it is held as tenants in common.  Owning property as tenants in common means that each individual owns a fully devisable proportionate share in the respective property.  Each owner can sell, partition, or mortgage his or her own individual portion of the property.  This can be true even without the permission of the other owner(s).  Owning the property as tenants in common gives each owner a complete right to use and occupy the entire premises without unreasonable interference during their lifetime.  Tenants in common must share in whatever profits are brought in from the property, but also must share in any and all expenses, including taxes.  They most important part to remember for tenants in common is that when a tenant in common passes away, his or her share does not automatically go to the other owner.  Depending on the relationship between owners (i.e. married or unmarried), it is possible that the other owners would have no claim whatsoever to the deceased co-owner's portion of the property. 

The second way of holding title to real estate in Massachusetts is as joint tenants.  The primary difference between holding property as tenants in common and joint tenants is that joint  tenants enjoy the right of survivorship.  A significant benefit of this relationship is that the property passes without having to go through the costs and hassles of probate, which would have to be done if co-owners held title as tenants in common.  In order to be joint tenants, it must be specified in the deed.  Otherwise, a Court may presume the default ownership of tenants in common.  Unfortunately, I have seen many situations where a spouse learns after their husband or wife passes away that the deed to their home was silent as to how they held the real estate (meaning they are defaulted to tenants in common).  Now they have to probate their loved one's estate to gain full ownership of the property.  It is important to not just assume you own your real estate as joint tenants (or tenants by the entirety); you must review your deed to make sure.  To correctly form a joint tenancy co-owners must share "four unities":  (1) Time (they must acquire the title to the property at the same time; (2) Title (they must have the same exact title to the property; (3) Interest (they must own equal shares of the property); and (4) Possession (they must have equal right to use and enjoy the whole property.  A joint tenancy can be broken after it is formed, which would revert the title status back to tenants in common.

The third way of holding title to real estate in Massachusetts is as tenants by the entirety.  Essentially, tenants by the entirety is the same as joint tenancy, except there is a "fifth unity" which is marriage.  The owners must be legally married at the time they take title.  Taking title by tenants by the entirety must also be specifically stated in the deed.  However, unlike joint tenancy, tenants by the entirety cannot be severed unless the couple becomes legally divorced.

If you have any questions about this change in the law or estate planning in general, please feel free to contact the Law Offices of Samuel S. Reidy.

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