Property Ownership Types

Property ownership in the United States is a framework of legal forms that determine how people hold, use, transfer, and inherit land and buildings. Knowing the differences matters for taxes, estate planning, creditor protection, control, and what happens if an owner dies or sells.

Sole Ownership

Sole ownership refers to a property type ownership in which a single person holds title to the property in their name alone. That owner has exclusive control over use, sale, financing, improvements, and rental decisions.

Sole ownership is the simplest structure of property ownership, as transfers require only the owner's signature and lenders deal with one primary borrower. This structure is best suited for unmarried individuals, investors purchasing under their personal name, and businesses or entities acting alone.

Advantages of sole ownership include the following:

• Full control and decision-making power
• Simple transfer or sale process
• No need to coordinate with co-owners

The disadvantages of sole ownership include the following:

• No survivorship rights as property passes through probate upon death.
• The entire value of the property is exposed to personal creditors or lawsuits.
• No built-in estate planning benefit.

Joint Tenancy

Joint tenancy with right of survivorship is a form of co-ownership where two or more individuals own equal shares of the property. A key feature of this property ownership type is that when one owner dies, the interest automatically passes to the surviving co-owners, bypassing probate. It is commonly used by married couples or partners, and parents and adult children sharing property.

Other prominent features of joint tenancy include the following:

• Equal ownership shares
• Right of survivorship
• Simplifies inheritance for co-owners

The disadvantages of joint tenancy include the following:

• All co-owners must agree to sell or refinance.
• Shares cannot be left to heirs in a will.
• If relationships change, such as in a divorce, the structure may become problematic.

Tenants in Common

Tenancy in common is a flexible ownership structure that allows multiple parties to own different (not necessarily equal) shares in a property. Unlike joint tenancy, there is no right of survivorship. This property ownership type is suited for siblings inheriting family property and friends or investors buying together with separate interests.

Key features of TIC include the following:

• Ownership flexibility: Each owner's share is a property right that can be sold, mortgaged, or bequeathed to heirs.
• Management and control: Co-owners share possession but not necessarily decision-making power. Practical arrangements typically require written agreements to handle expenses, income distribution, and sale processes.
• Estate consequences: When a tenant in common dies, their interest goes to their estate and follows their will or intestacy laws rather than automatically passing to the remaining co-owners.

Advantages of TIC include the following:

• Ideal for investment groups or family co-ownership
• Shares can be sold independently

Disadvantages of TIC include the following:

• Disagreements may arise over property use or sale
• May lead to forced partition if one owner wants out

Community Property

Community property refers to an ownership structure where married couples are considered to jointly own property acquired during the marriage, regardless of whose name is on the deed. Examples of states considered community property states include Arizona, California, Idaho, Louisiana, and New Mexico.

Per community property rules:

• Assets acquired during marriage are owned 50/50
• Inheritance and gifts usually remain separate
• Property cannot be sold or mortgaged without both spouses' consent

Note that some states (such as California, Arizona, Texas, Nevada, and Wisconsin) offer Community Property with Right of Survivorship (CPWROS), which combines equal ownership with automatic transfer upon death.

Benefits of community property includes:

• Equal ownership during marriage
• May offer tax advantages

Drawbacks of community property includes:

• Can lead to disputes during divorce or estate settlement
• Only available in select states

Trust-held Property

Real estate can also be held in the name of a trust rather than an individual. In this case, the trustee manages the property for the beneficiary, under terms set by the grantor. The grantor is the individual who created the trust.

Trust-held property is ideal for estate planning, high-value properties, and families with minor or special-needs beneficiaries.

Common types of trust include:

• Revocable Living Trust: Can be altered or revoked during the grantor's lifetime.
• Irrevocable Trust: Generally permanent and used for tax or asset protection.

The advantages of trust-held property include the following:

• Avoids probate
• Provides privacy (not a public record like a will)
• Can manage property if the owner becomes incapacitated
• Allows structured inheritance planning

The following limitations exist for a trust-held property:

• More complex setup
• Requires ongoing trustee oversight

Ownership Rights vs. Responsibilities

Regardless of ownership type, all property owners have certain rights and duties. Rights commonly include the following:

• Possession
• Exclusive use
• The right to rent or sell
• The right to exclude others

Responsibilities include:

• Paying property taxes
• Maintaining the property
• Complying with zoning and safety laws
• Honoring recorded encumbrances like mortgages and easements

Inheritance Impact

How property transfers at death depends heavily on ownership form and local law. The three most common outcomes are automatic transfer by survivorship, transfer under the deceased owner's estate plan, or transfer under state intestacy rules.

If the property is held in sole ownership, it typically goes through probate. In contrast, joint tenancy includes a built-in right of survivorship; the property automatically passes to the surviving co-owners without going through probate. However, this also means the deceased owner cannot leave their share to someone else in a will, as it transfers by law.

In tenancy in common, each co-owner holds a distinct share that can be sold, transferred, or left to heirs through a will. When one co-owner dies, their share is inherited according to their estate plan or, if no will exists, state intestacy laws.

In community property states, the deceased spouse's share may go through probate unless the couple has opted for Community Property with Right of Survivorship (CPWROS), which enables the surviving spouse to receive the entire property automatically.

Trust-held property avoids probate altogether. Since the trust, not the individual, legally owns the property, it is distributed according to the terms set in the trust agreement.

Property Ownership Types FAQs

The following are frequently asked property ownership type questions.