With the rising property prices, not all of us can really afford a lot of the stuff that's on sale. Purchasing a property can be tough, and at the end of it, you want to clinch the best deal available. In such a case, the option of having joint tenancy is a good idea. This means that you can buy the property of your choice and share the ownership of it.
Joint tenancy is an agreement between two or more people who agree to purchase a property together. While the agreement specifies the stake of each party in the property, it is always kept equal. It also specifies the rights of each party with respect to the property.
For example, if the property is owned by two people, who are not married to each other and do not wish to cohabit the property, they may choose how many months of the year does each person get to reside in the co-owned property.
The agreement also includes any accord, struck by the parties involved, related to extension or any improvements to the property, and the rights of the remaining partners should one partner choose to sell his or her stake in the property.
The joint tenants agreement makes for a pretty exclusive club which not everyone can enter. For example, if one partner wishes to sell his or her stake, he or she cannot do so without the consent of the rest of the parties.
The right of survivorship is a pretty interesting clause which more often than not, exists in the joint tenancy agreement. It basically means that on the death of one of the co-owners, his or her stake in it will be passed on to the rest of the partners in equal measure.
For example, if a couple jointly own a property covered under this agreement, then the right over the whole property is passed on to the surviving partner upon the death of the other partner.
This type of agreement is pretty popular among married couples. Of course, there are a couple of things you need to keep in mind before entering into such a contract.
- The right of survivorship takes precedence over claims on the property by the deceased person's heirs, beneficiaries, and creditors. The surviving partner(s) becomes the heir and the rights of all other heirs, as per the will, are nullified.
- This arrangement may not help avoid gift taxes, federal estate taxes, and state inheritance taxes. These still need to be paid on the property.
- Each party always has an equal share in the property owned.
- The joint owner can mortgage his or her share in the property, but with the consent of the other owners.
- Transfer of ownership from the deceased to the survivor involves no costs related to probate administration.