Concurrent ownership and Florida’s property laws
When it comes to commercial or residential real estate investments, thoughtful property buyers must consider not only what property to invest in, but how to structure that investment. This is particularly true when it comes to concurrent ownership or, to put it in plain English, properties that you own in conjunction with someone else, whether it be a family member or business partner.
As any qualified Fla real estate lawyer will tell you, there are three ways that the concurrent ownership of a property can be structured according to Florida real estate law:
- Tenancy in Common
- Joint Tenancy with Right of Survivorship
- Tenancy in the Entirety
Each form of concurrent, or joint, ownership offers specific advantages – and potential disadvantages. To ensure the best interests of both potential buyers and sellers in a real estate transaction, it is important to understand what distinguishes each.
Understanding the 3 Forms of Concurrent Ownership in Florida
1. Tenancy in Common
This is the default form of co-ownership under Florida law. On the surface, it appears fairly straightforward: your interest in the property is based on what percentage of the price you paid. For example, if you have two partners, each of whom contributed 25 percent of a property’s sales price and you contributed 50 percent, you would own a 50 percent interest in the property and each of your partners would own a 25 percent share.
But when real estate is held by tenants in common, things are not as straightforward as they might first appear. The percentages cited in the above example do not carry forward in terms of the rights of possession and other general property rights. In other words, if you own a 50 percent stake in a piece of real estate, your access is not limited to 50 percent of the property. You would have full rights of possession, but so would every other co-owner with an investment in the property.
If one of the co-owners of a property held by tenants in common dies, their share becomes part of their estate and will be passed on to the designated beneficiary or beneficiaries named in their will; it does not revert to the other owners. In other words, there are no rights of survivorship associated with tenancy in common. In fact, this is the only form or joint ownership that is subject to probate.
2. Joint Tenancy with Right of Survivorship
Unlike with tenancy in common, where each joint tenant owns a specific percentage of the property in question, with this form of co-ownership each tenant is provided full property rights. And, of course, the right of survivorship ensures that if one or the other of the co-owners passes away, the remaining owner inherits the property fully without having to go through probate.
3. Tenants in the Entirety
This form of co-ownership is reserved solely for married couples. As that implies, it is limited to two people or co-tenants, each of whom has equal and full rights in the property. If one or the other dies, the survivor inherits their share of the property and becomes the sole owner. If the marriage ends in divorce, the tenancy in the entirety will convert to a joint tenancy with each person owning a 50 percent interest in the property, unless otherwise stipulated in the divorce agreement. But what if an unmarried couple buys a home together? What would the best form of co-ownership be for them? That’s a question for a qualified Fla real estate lawyer.
Which form of joint ownership is best for you or your client?
No two real estate transactions are exactly the same, especially when it comes to high-end real estate. In cases of joint tenancy, there are any number of factors, ranging from tax considerations and estate planning to family relationships, that should be taken into account when determining which form of co-ownership is best in any given situation.
Florida law allows for several different approaches to joint tenancy and human nature can complicate all of them. To avoid potential family drama or unintended financial consequences, and increase the odds of achieving your personal goals, consult with a qualified Fla real estate lawyer to map out your best moves.
To ensure best practices during a new property investment, consult Florida Bar Board-Certified Attorneys David E. Klein, Esq. or Guy Rabideau at Rabideauklein.com before you sign on the dotted line. They have the expertise and experience you need to ensure that your interests are protected throughout your real estate transactions in Palm Beach County and throughout Florida. Contact Rabideau Klein to discuss the legal implications of your next Florida closing.