Obviously, not every home buyer that purchases real estate is married. Unmarried couples and friends, as well as relatives, have two choices on how they may hold title to real estate in Massachusetts. Married couples have another choice.
In Massachusetts, co-owners who buy 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. Only married couples may take title to a property as tenants by the entirety.
Tenants in Common
Tenants in common is the default form of title non-married persons will take in a deed. Owning as tenants in common means that each party owns a fully devisable proportionate share in the property. Their portion may be individually sold, partitioned or mortgaged.
For example, Bob and Betsy buy a property and take title as tenants in common. They each own a 50 percent share (though they could take title owning different percentage shares). Several years later, Bob decides to sell his interest in the property to Carl. Carl and Besty would then each own a 50 percent share. Alternately, Bob could have sold half of his 50 percent share to Carl, and then all three would own as tenants in common: Betsy 50 percent and Bob 25 percent and Carl 25 percent.
Owning as tenants in common gives each owner a complete right to use and occupy the entire premises without unreasonable interference during the life of ownership. Tenants in common are required to allow other owners unrestricted rights of access and they must share in whatever profits arise from ownership. Likewise, tenants in common are required to contribute as per their proportionate share to management and expenses of the property, and can be sued for failing to pay their share of taxes, mortgage payments, etc.
When a title holder in tenants in common passes away, his/her interest in the property passes to their estate – either to his beneficiaries named in the will or through his/her heirs as per the intestacy statute of the Commonwealth of Massachusetts.
The major difference between tenants in common and joint tenants is that owning property in joint tenancy gives each owner a right of survivorship. So for example, Bob and Betsy own a property as joint tenants with right of survivorship: If Betsy passes away, Bob takes title to the property automatically. A significant benefit of this operation of law is that for at the least the real estate owned as joint tenants, the property passes without having to go through the costs and hassles of probate. It also may eliminate unpleasant disputes over ownership of the property with a potential heir to the deceased.
In order to take title as joint tenants, there should be specific wording in the deed that the grantees are taking title “as Joint Tenants, with a right of survivorship.” It is really important to specifically state the right of survivorship, or a court may presume the default ownership of tenants in common.
Additionally, to create a joint tenancy, the co-owners must share “four unities”:
1. Time: they must acquire the title to property at the same time. In our example, if Bob and Betsy own a property as joint tenants and Betsy coveys her interest to Donnie, Bob and Donnie do NOT own as joint tenants; they own as tenants in common.
2. Title: they must have the same exact title to the property. If one owner’s title is conditional and another’s is not, there is no unity of title.
3. Interest: they must own an equal share of the property. Going back to Bob and Betsy, if Bob owns a 25 percent and Betsy owns a 75 percent share, they cannot take title as joint tenants.
4. Possession: they must have an equal right to use and enjoy the whole property.
At any given point, a joint tenancy can be “broken” by an act or deed and that would revert the ownership to tenants in common.
Tenants by the Entirety
Taking title as tenants by the entirety is only available to married couples in Massachusetts. It is similar to joint tenancy, but with a “fifth unity”: 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, but unlike joint tenancy, it cannot be severed unless by decree of divorce.