Utah Real Estate Code 57-1-5: Creation Of Joint Tenancy Presumed, Tenancy In Common, Severance Of Joint Tenancy, Tenants By The Entirety, Tenants Holding As Community Property.(1) (a) (i) Beginning on May 5, 1997, every ownership interest in real estate granted to two persons in their own right who are designated as husband and wife in the granting documents is presumed to be a joint tenancy interest with rights of survivorship, unless severed, converted, or expressly declared in the grant to be otherwise. (iv) Joint tenancy may not be established between an entity or organization and another entity or organization. (b) Every ownership interest in real estate that does not qualify for the joint tenancy presumption as provided in Subsection (1)(a) is presumed to be a tenancy in common interest unless expressly declared in the grant to be otherwise. (6) the amendments to this section in Laws of Utah 1997, Chapter 124, have no retrospective operation and shall govern instruments executed and recorded on or after May 5, 1997. Tenancy in CommonTenancy in common is the most prevailing form of concurrent ownership of real property used by unmarried people. In a tenancy in common, two or more people own the same parcel of land in undivided interests which may be equal or unequal in size. For example, two people each may own a ½ undivided interest or one might own a 25% undivided interest and the other one the remaining 75% interest. Whatever the size of the undivided interests, each of the owners is entitled to the use and possession of all of the property. Each owner’s undivided interest in the property is freely alienable by sale, gift, or otherwise and, therefore, this form of concurrent ownership is the most unrestricted form. Each owner is free to sell, encumber, and allow that owner’s interest in the property to pass by will or intestate succession to the owner’s heirs or devisees (the other owners having no right of survivorship in any other owner’s undivided interest in the property). Someone who purchases property for investment purposes, who wants to be able to devise his or her property pursuant to a will or trust, or who simply does not have a plan for the property should consider this form of ownership. Although a tenancy in common allows each owner the freedom to dispose of that owner’s interest in the property as that owner chooses, there are a few obligations and potential problems that anyone taking title to property as a tenant in common should consider: • Generally, a tenant in common who possesses the property does not have to pay the other owners for possession of the property as long as the other owners are free to use and possess the property as well. If, however, one owner denies the other owners the right to use and possess the property, those owners may take legal action to regain possession of the property and may be entitled to damages. Joint Tenancy with the Right of SurvivorshipA joint tenancy with the right of survivorship is similar to a tenancy in common, having the same attributes mentioned above, but with one very significant additional attribute: the right of survivorship. Under a joint tenancy with the right of survivorship, when one owner dies, the other joint tenant gets that owner’s share in the property, regardless of the provisions of the deceased owner’s will or the laws of intestate succession. If the ownership interests among three or more joint tenants are held in unequal shares, the share of the deceased owner is divided among the surviving joint tenants according to their respective pro rata interests, unless the creating instrument provides otherwise. Because of the effect of this form of concurrent ownership on the disposition of one’s property after death, a joint tenancy with the right of survivorship should be used only after consultation with an estate planning professional. • Make sure the instrument creating the joint tenancy with the right of survivorship explicitly states that the purpose of the instrument is to create a joint tenancy with the right of survivorship and not a tenancy in common. If two unmarried people take title to property, the law presumes that they will hold title as tenants in common unless the language in the instrument clearly provides otherwise. • Despite the “right of survivorship” one joint tenant can sever the joint tenancy with the right of survivorship by transferring that owner’s undivided interest to another party and thereby create a tenancy in common. Despite the intention of the party creating the joint tenancy with the right of survivorship, one joint tenant can unilaterally destroy that form of concurrent ownership. Tenancy by the EntiretyOnly a husband and wife (a bill has been introduced in the General Assembly to change references to “husband” and “wife” in tenancy by the entirety statutes to “spouse”) can own property as tenants by the entirety. It was the early common law’s version of “social security” because of the legal fiction that neither the husband nor the wife owns the property; rather, it is the marital state or union that owns the property. As a result, a lien or judgment docketed against one spouse will not attach to property owned as tenants by the entirety because the property is not owned by the husband or the wife, but by the marital entity. If two people who are married to each other take title to property, they will own the property as tenants by the entirety unless the instrument of conveyance clearly provides otherwise. Note, however, that a man and woman who own property and then subsequently get married do not then automatically own the property as tenants by the entirety. They must record a new instrument of conveyance to create a tenancy by the entirety. A tenancy by the entirety is similar to a joint tenancy with the right of survivorship, but with a few additional characteristics: • Whereas a joint tenancy with the right of survivorship can be severed by one owner, neither spouse can sever the tenancy by the entirety by selling an interest in the property. In fact, neither spouse may sell or encumber the property or any interest in it without the other spouse executing the deed, deed of trust, or other instrument. One spouse also cannot devise his or her interest in a will. • Despite the common law protection of the property from the individual debts of the husband and wife, there is a limited exception for federal tax liens. The United States Supreme Court held that a federal tax lien against one spouse will attach to that spouse’s “interest in the property” pursuant to state law, but it is still unclear exactly what that interest is for federal tax purposes in states such as North Carolina where, at least until death, divorce, or voluntary conveyance, neither spouse is considered to own any interest in the property. • A tenancy by the entirety may be destroyed only by: (i) voluntary partition where the married couple conveys the property to themselves as tenants in common (neither spouse can force a partition); (ii) absolute divorce, in which case the former spouses become tenants in common, each with a ½ undivided interest in the property; or (iii) death of one spouse, in which case the survivorship element of the tenancy by the entirety automatically makes the surviving spouse the sole owner of the property. How to Take Title in Joint TenancyTo create a joint tenancy, be sure to get the right legal words on the title document. Joint tenancy is a popular way to avoid probate. It certainly has the virtue of simplicity. To create a joint tenancy, all you need to do is put the right words on the title document, such as a deed to real estate, a car’s title slip, or the signature card establishing a bank account. General Rule In Majority Of StatesIn the great majority of states, if you and the other owners call yourselves “joint tenants with the right of survivorship,” or put the abbreviation “JT WROS” after your names on the title document, you create a joint tenancy. A car salesman or bank staffer may assure you that other words are enough. For example, connecting the names of the owners with the word “or,” not “and,” does create a joint tenancy, in some circumstances, in some states. But it’s always better to unambiguously spell out what you want: joint tenancy with right of survivorship. Joint tenancy or a form of ownership that achieves the same probate avoiding result is available in all states, although a few impose restrictions. Remember that one rule applies in every state except Colorado, Connecticut, North Carolina, Ohio, and Vermont: All joint tenants must own equal shares of the property. If you want a different arrangement, such as 60-40 ownership, joint tenancy is not for you. State Restrictions on Joint Tenancy• Alaska: No joint tenancy in real estate, except for husband and wife, who may own as tenants by the entirety The form of ownership in which you take title to property can significantly affect the way in which you can use the property, dispose of it, and pass it to others. Because there are benefits and consequences to taking title to property by each of the ways described above, especially regarding estate planning matters, it is important to take time to consider, along with the many other considerations you make when purchasing property, exactly how you intend to use and ultimately transfer the property. Utah Real Estate LawyerWhen you need legal help from a Utah Real Estate Attorney, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.
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