Learn More About Title Insurance and Real Estate-Related Matters
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The process of transferring real estate includes several important steps to help ensure the property is conveyed properly. Among the myriad requirements for a grantee (person or entity acquiring the property) is deciding how to take title to the real estate. Also called the method or type of ownership, the way grantees hold title can have significant legal ramifications.
In Illinois, grantees have multiple options for taking title:
Individually/Solely/Severalty – When a person takes title to real estate in his or her name alone, he or she is holding title solely, which means that individual has all rights of ownership for the property. Typically used by a single grantee, sole ownership also can be used by a married person. It is important to note, however, that a non-title-holding spouse could gain homestead rights to the property, which often necessitates a signed waiver or renunciation of those rights by the non-title-holding spouse in certain events, such as on a mortgage or conveyance deed. Upon a sole owner’s death, the property will pass to his or her heirs, devisees, or estate.
Tenants in Common – When two or more people take title to real estate as tenants in common, all the named grantees own an undivided share of the property. Tenancy in common can be owned in equal or unequal shares; however, all grantees have a right of possession of the entire property, regardless of ownership share, unless otherwise specified in the deed or other written agreement.
Grantees who are not married, who have a business relationship, or who are acquiring the property for investment purposes often choose this ownership method. It allows each tenant in common to sell or pledge his or her share of the real estate at any time without consent of the other owners. This tenancy also provides no right of survivorship to co-owners, enabling a deceased owner’s share to pass to his or her heirs, devisees, or estate.
In the event a judgment or other lien is placed against one owner, that judgment or lien will not affect the shares of any other owners. However, that creditor may foreclose on and force the sale of the property to satisfy the debt.
If no form of joint tenancy is indicated on a deed, the presumption is that the property was taken as tenants in common.
Joint Tenants – When two or more people take title to real estate as joint tenants, all the grantees own an undivided, equal share in the entire property. Often used by couples — married and unmarried — joint tenancy allows each owner to sell or pledge his or her share at any time without consent of the other owners. This type of ownership may be severed by an owner conveying his or her share to himself or herself or to a third party, converting it to tenancy in common.
In the event of an owner’s death, that person’s share passes to any surviving joint tenants and not to the deceased owner’s heirs, devisees, or estate. Only upon the death of the last surviving joint tenant does the entire property pass to that owner’s heirs, devisees, or estate.
Should a judgment or other lien be placed against one owner, that judgment or lien will not affect the shares of any other owners. However, that creditor may foreclose on and force the sale of the property to satisfy the debt.
Tenants by the Entirety – Only spouses or partners in a civil union may take title to real estate as tenants by the entirety. This method of ownership requires the following conditions be met to be valid:
As specified in 765 ILCS 1005/1c, “no deed, contract for deed, mortgage, or lease of homestead property held in tenancy by the entirety shall be effective unless signed by both tenants.” More simply, neither spouse/party to the civil union may sell or pledge his or her share without the written consent of the other.
In the event one spouse or party to the civil union dies, title to the property automatically passes to the survivor. Upon the surviving owner’s death, the property passes to that owner’s heirs, devisees, or estate.
The principal advantage of tenancy by the entirety is the ability to protect the property from future judgments and liens against only one of the owners, which is true when all the following conditions apply:
If one owner has a judgment or other lien placed against him or her, that creditor can file a lien on the primary residence. However, the creditor cannot foreclose on or force the sale of the property until or unless the tenancy by the entirety ends.
Additional Options – Instead of taking title in his or her name personally, a grantee may elect to hold title as an entity for business, estate, or tax planning purposes. These other ways of holding title include (but are not limited to) trusts, corporations, limited liability companies, and partnerships.
To better ensure you make an informed decision when choosing how you will take title to your new real estate, we recommend you consult with your attorney. Together, you can discuss the best option for your individual situation.