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Old January 6, 2011, 04:03 PM   #1
puppymommo
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Joint Tenancy vs Tenants in Common

I'm in the process of transferring a timeshare (to me) and am not sure I understand the difference between Joint Tenancy with Right to Survivorship vs Tenants in Common. This would be for my husband and myself. What I've read on the web is talking about real estate but I'm not sure timesharing works the same.

Any insight is welcomed!

Susan
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Old January 6, 2011, 04:14 PM   #2
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Joint tenancy with rights of survivorship means that if either party passes, the property goes to the other party.

Tenants in common means that if either party passes, the property goes to the estate of the deceased party.

For example, in the case of husband and wife, the estates could be the same, so it doesn't make much difference.

However, if you have two friends who purchase a property together it does matter. Let's say they are both married. If one passes and they are deeded with rights of survivorship, then the other gets the property. However, if it's deeded as tenants in common, then it goes to the spouse of the deceased.

Another common way to go is Tenants by the Entireties. That is for a husband and wife. It means the property belongs to the marriage as one.
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Old January 6, 2011, 04:14 PM   #3
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This is an important distinction.

A tenancy in common means that everyone has an equal interest and then can do whatever they want with their own interest (such as devise it to a child in a will). Four people would all get 1/4 interests. If it were in 100 acres, one of the owners could even ask the court to partition off their 100 acres and give him separate title.

Joint tenants with right of survivorship cannot pass on or divide their interest. If you name 4 people on a deed and designate them as joint tenants with the right of survivorship, the last person living takes the deed and can pass it on as they wish. It is generally a disfavored form of conveyance.
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Old January 6, 2011, 05:14 PM   #4
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A deeded TS is considered "real estate" and title is held in the same manner.

A husband+wife team should take title "as husband and wife," which by default is considered a tenancy by the entireties in most states. As such, there a right of surviviorship and if either spouse suffers a creditor's claim, it cannot attach to the property since the other also owns "the entirety."

OTOH, a JTWROS (joint tenancy w-right of survivorship) has a survivorship feature, but in many states, is subject to liens against either spouse becuz each owns merely a share.

Likewise, the shares of tenants in common may be transferred to third parties, subject to liens or subject to probate, since they have no survivorship feature.
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Old January 7, 2011, 12:28 AM   #5
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For "major" real-estate properties, a tax liability/step-up basis might come into play. In California, many people (married) are not having is listed at Joint tenancy (with right of survivorship) or tenants in common, but as "community property". You get the benefits of a "stepped-up" basis when one passes, along with what "joint tenancy" will do.

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Old January 7, 2011, 02:01 AM   #6
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Quote:
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This is an important distinction.

A tenancy in common means that everyone has an equal interest and then can do whatever they want with their own interest (such as devise it to a child in a will). Four people would all get 1/4 interests. If it were in 100 acres, one of the owners could even ask the court to partition off their 100 acres and give him separate title.

Joint tenants with right of survivorship cannot pass on or divide their interest. If you name 4 people on a deed and designate them as joint tenants with the right of survivorship, the last person living takes the deed and can pass it on as they wish. It is generally a disfavored form of conveyance.
ownership does not have to be divided into equal parts. It can divided up in percentages.

Also, tenancy in common usually means that the title is an Undivided Interest meaning that you cannot divide the property into pieces. For example, one owner owns the garage, the other owner owns the kitchen. It is usually a percentage of the entire property.
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Old January 7, 2011, 04:46 AM   #7
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ownership does not have to be divided into equal parts. It can divided up in percentages.

Also, tenancy in common usually means that the title is an Undivided Interest meaning that you cannot divide the property into pieces. For example, one owner owns the garage, the other owner owns the kitchen. It is usually a percentage of the entire property.
I think we're sort of saying the same thing, we're just saying it differently.

With a TIC, all tenants have equal and total access to the property, BUT their interests are always considered on a percentage basis when it comes to incomes and liabilities. So if, for example, property taxes were due, and there were four owners, each would be liable for 1/4 of the property taxes. Or if you rented the property on an annual basis, each would be entitled to 1/4 of the revenue.

Every TIC does come with a right to partition, which means that at any point any owner can ask a court to divide the property. In the case of a single-family residence, this would not result in anyone getting the garage, but the court forcing a sale.

And while some states do have "tenancy by entirety" or "community property", many do not.
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Old January 7, 2011, 12:34 PM   #8
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Thank you, everyone, for your input! It has been very helpful.
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Old January 7, 2011, 03:27 PM   #9
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Tenants in Common = Probate when 1 party dies

Tenants in Common for timeshares is basically a nightmare. If you use this tenancy and 1 party on title dies, the deceased persons 1/2 must be probated to be given to their heirs. Probate is expensive & time consuming. Best tenancy to use for timeshares is Joint Tenants. If you use Tenants by the Entirety & there is a divorce, the tenancy reverts to Tenants in Common upon divorce. Sometimes a party is awarded a timeshare in the divorce & doesn't get around to doing a new deed & their ex-spouse dies. Big problems ensue.
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Old January 7, 2011, 07:41 PM   #10
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Tenancy in common also means that one partner may legally sell/transfer his/her share to a third party without the other partner's consent or even knowledge. I agree it could cause nightmares.
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Old January 8, 2011, 08:52 AM   #11
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Tenancy in common also means that one partner may legally sell/transfer his/her share to a third party without the other partner's consent or even knowledge. I agree it could cause nightmares.
Ahh, here we have a common misunderstanding of joint tenants with rights of survivorship.

Any member of joint tenancy can sell/transfer or mortgage their share. When they do so, it automatically turns their interest into a tenancy in common. So if three people owned property as joint tenants (let's call the A, B, C), and A mortgaged their interest, A's interest is automatically transformed into a tenancy in common and can never be transformed back. B & C would continue to own as joint tenants.

A could even petition a court to have their interest physically divided or to be paid off.

A tenancy by the entirety is only allowed in some states and only allowed between married couples. When this estate is allowed, neither partner can do anything with the interest without the other partner's consent - can't sell it, can't mortgage it, etc.
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Old January 8, 2011, 09:12 AM   #12
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The thread title gave me a frightening flashback to an essay question on the CPA exam several years in my past. I had the answer right and switched it just before leavng the testing center. As a result, I failed the law section on my first attempt.
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Old January 8, 2011, 09:28 AM   #13
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The thread title gave me a frightening flashback to an essay question on the CPA exam several years in my past. I had the answer right and switched it just before leavng the testing center. As a result, I failed the law section on my first attempt.
I'm studying for the bar exam, that's why I know it.
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Old January 8, 2011, 10:13 AM   #14
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don't take title in your personal name

Quote:
Originally Posted by puppymommo View Post
I'm in the process of transferring a timeshare (to me) and am not sure I understand the difference between Joint Tenancy with Right to Survivorship vs Tenants in Common. This would be for my husband and myself. What I've read on the web is talking about real estate but I'm not sure timesharing works the same.

Any insight is welcomed!

Susan
Have a lawyer start a simple trust to hold title to the timeshare. Avoid out of state probate, passes to who you want upon death and if the TS goes south, you can just let it go because the trust won't have any assets to go after.
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Old January 8, 2011, 03:42 PM   #15
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Ahh, here we have a common misunderstanding of joint tenants with rights of survivorship.

Any member of joint tenancy can sell/transfer or mortgage their share. When they do so, it automatically turns their interest into a tenancy in common. So if three people owned property as joint tenants (let's call the A, B, C), and A mortgaged their interest, A's interest is automatically transformed into a tenancy in common and can never be transformed back. B & C would continue to own as joint tenants.

A could even petition a court to have their interest physically divided or to be paid off.

A tenancy by the entirety is only allowed in some states and only allowed between married couples. When this estate is allowed, neither partner can do anything with the interest without the other partner's consent - can't sell it, can't mortgage it, etc.
Is there a way to do the same if the partners are not married? What is the difference between T by Entirety and Community Property?
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Old January 8, 2011, 04:10 PM   #16
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Is there a way to do the same if the partners are not married? What is the difference between T by Entirety and Community Property?
A tenancy by the entirety is analogous to community property. Generally, in community property states, all property accumulated by a husband and wife during their marriage becomes joint property, even if acquired in the name of only one partner (except for inheritances). When one spouse dies, all the community property goes to the other, except in Texas where surviving children get one-half.
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Old January 8, 2011, 04:13 PM   #17
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Tenants in Common for timeshares is basically a nightmare. If you use this tenancy and 1 party on title dies, the deceased persons 1/2 must be probated to be given to their heirs. Probate is expensive & time consuming. Best tenancy to use for timeshares is Joint Tenants. If you use Tenants by the Entirety & there is a divorce, the tenancy reverts to Tenants in Common upon divorce. Sometimes a party is awarded a timeshare in the divorce & doesn't get around to doing a new deed & their ex-spouse dies. Big problems ensue.
Not only must a tenancy in common interest be probated, but the probate proceeding must be in the state where the real estate is located.

That means if a decedent owned tenancy in common interests in timeshares located in Florida, Hawaii, and Arizona, the executors or administrators would have to open probate proceedings in each of those states (plus the state of the decedent's residence). Not very cost effective for a bunch of $1,000 timeshare interests.

This is why owning timeshares in a trust is usually the right way to go (especially for a single person who owns multiple timeshares in multiple states).

Joint tenancy or tenancy by the entirety will avoid the probate problem on the first death, but even then, the survivor should probably transfer the timeshares into a trust.
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Old January 8, 2011, 04:47 PM   #18
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ctyatty:
Does it matter which state the trust is formed in with respect to the state where the TS is, and the residence of the trustees and beneficiaries of the trust? ie. Can an out of state trust record a deed.
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Old January 8, 2011, 04:55 PM   #19
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ctyatty:
Does it matter which state the trust is formed in with respect to the state where the TS is, and the residence of the trustees and beneficiaries of the trust? ie. Can an out of state trust record a deed.
The trust is legally located where the trustee is domiciled.

A trust can own property anywhere; our California trust holds title to our timeshares in AZ, SC, and HI.
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Old January 9, 2011, 02:58 PM   #20
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What state? My dd24 just registered to take North Carolina and Tennessee this summer. The NC application was a nightmare.

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Old January 12, 2011, 03:34 AM   #21
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You need to talk to someone who is familiar with the law in the state where the timeshare is located, as there are quirks between various states. Note that some of the advice in this thread has limitations like ''in most states''.

For example, the North Carolina legislature years ago passed a law, which is still on the books, that abolished joint tenancy in the state. However, some years later, the state Supreme Court rendered a decision that essentially said that in spite of that statute a joint tenancy could still be created in the state if you did it a very specific way. On the rare occaisions that North Carolina lawyers create joint tenancies, they usually track the exact language approved in that case, as otherwise the vailidity of the joint tenancy is highly questionable. On the other hand, tenancy by the entirety has always been recognized in NC, and is very simple to create, by the inclusion of two words in the deed.

I have seen many deeds prepared by the out of state timeshare closing companies which use laymen in another state rather than an attorney in North Carolina to prepare deeds screw this issue up by recording deeds using joint tenancy language that does not follow the state Supreme Court's language. Instead they use something that may work fine in their own state but does not pass muster in NC. This screwup means that the buyers end up with a tenancy in common rather than the joint tenancy they wanted, which could be worse. There are other common mistakes that these closing companies make regularly which mean that the buyer ends up with an invalid deed that does not convey any valid title at all.
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Old January 12, 2011, 04:44 PM   #22
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Good Point

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You need to talk to someone who is familiar with the law in the state where the timeshare is located, as there are quirks between various states. Note that some of the advice in this thread has limitations like ''in most states''.

For example, the North Carolina legislature years ago passed a law, which is still on the books, that abolished joint tenancy in the state. However, some years later, the state Supreme Court rendered a decision that essentially said that in spite of that statute a joint tenancy could still be created in the state if you did it a very specific way. On the rare occaisions that North Carolina lawyers create joint tenancies, they usually track the exact language approved in that case, as otherwise the vailidity of the joint tenancy is highly questionable. On the other hand, tenancy by the entirety has always been recognized in NC, and is very simple to create, by the inclusion of two words in the deed.

I have seen many deeds prepared by the out of state timeshare closing companies which use laymen in another state rather than an attorney in North Carolina to prepare deeds screw this issue up by recording deeds using joint tenancy language that does not follow the state Supreme Court's language. Instead they use something that may work fine in their own state but does not pass muster in NC. This screwup means that the buyers end up with a tenancy in common rather than the joint tenancy they wanted, which could be worse. There are other common mistakes that these closing companies make regularly which mean that the buyer ends up with an invalid deed that does not convey any valid title at all.
Good Point. In which state is the timeshare located?
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