There are a few different ways individuals can jointly hold title to real estate. The method you choose to hold title will depend on what you are trying to accomplish.
- Tenancy in Common – Two or more individuals can jointly hold title to real estate as tenants in common. The individuals can hold different percentage interests as they deem appropriate. Each person’s share can be transferred (via sale or otherwise) or inherited from his or her estate. In other words, title does not automatically transfer to the surviving joint tenant(s) on the death of one of the holders of title in a tenancy in common situation.
- Joint Tenancy with Rights of Survivorship – In this situation, two or more individuals can jointly hold title to real estate, however unlike a tenancy in common, upon the death of a joint tenant, his or her share passes to the other joint tenant(s). Title is not held in percentages. Instead, each person holds title to the entire parcel or parcels of real estate together with the other joint tenant(s).
- Tenancy by the Entirety – In this situation, the title is held identical to joint tenancy with rights of survivorship, but with a few special rules: (a) Only two people can hold title to real estate as tenants by the entirety. (b) The holders of title must be husband and wife. (c) The real estate must be the parties’ primary residence. The major benefit to holding title this way is that the property is shielded from the judgment creditors of any one of the parties. For example, if a husband and wife own their property as tenants by the entirety and the husband has a money judgment entered against him, the real estate is safe from the interests of the husband’s creditor(s) as long as the property remains in tenancy by the entirety. If, however, the money judgment is entered against both the husband and the wife, the property is fair game to the creditors.
Real estate can also be held in land trusts, wherein title to the real estate is held by a party (the land trustee) for the benefit of another party or parties (the beneficiaries). The land trustee is said to hold legal title. The beneficiaries hold equitable title. There is a written land trust agreement between the beneficiaries and the land trustee with specific instructions on how the parties deal with the property. The land trustee is generally a land trust company or a bank. The holders of the equitable title (the beneficiaries) can hold said equitable title in the same manners as listed above. The beneficial interest in a land trust can also provide for contingent beneficiaries so that the equitable title can pass to others upon death of the original beneficiary or beneficiaries and avoid probate, at least for the real estate. Land trusts are often set up when the owner(s) of real estate do so for privacy reasons in that they do not want their name appearing in the public records as an owner of real estate.
Corporations and limited liability companies (LLC) can also hold title to real estate, but the legal entity (the corporation or LLC) holds title to the real estate.
If you have any questions about holding title to real estate in Illinois, whether it be in Arlington Heights, Palatine or even outside Cook County, or if you are looking to buy or sell real estate, please do not hesitate to contact the Law Offices of Roger W. Stelk at (847) 506-7330.
