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What is Real Property?
Real property, which is also often referred to as real estate, is the land and the things that are permanently attached to it, like a house. Real property can have a sole owner. Real property can also have multiple owners. The owner may be a person, but the owners can also be a company, a trust, or other entity. A property can be owned by a combination of people and entities. There is no real limit on the number of people or entities that can own a specific piece of real property.
This article focuses on ownership of real property in Maryland by multiple owners, often referred to as “joint ownership” or “concurrent ownership.” It is very important to know where the real property is located because different states have different laws about how multiple owners can own real property.
In Maryland, joint owners have three options for owning or “holding title” to real property. The laws related to joint ownership of real property in Maryland is primarily governed by case law, which is the law found in judges’ opinions. It is very important to understand the differences between the three options because each option has different rights and obligations for the joint owners.
A “deed” is a legal document that shows the ownership of real property and is recorded with the Land Records Department in Maryland.
“Holding title” to real property is a legal way of saying you own that real property.
“Presumption” means that a court is allowed to assume something to be true unless there is evidence that disproves or outweighs the presumption. The burden is the party arguing against the presumption to provide this evidence to disprove or outweigh the presumption.
“Right of survivorship” means that a surviving co-owner can take ownership of the deceased co-owner's share of the property.
“Undivided interest” means that each owner has an equal right to use and enjoy the entire property. However, no individual has an exclusive right to any specific part of the property.
Tenancy in Common
Tenancy in Common is a form of joint ownership of real property with two or more owners called “tenants in common.” Each co-owner or tenant in common owns a specific share or percentage of the property. Tenants in common can have equal shares, but they can also hold title in unequal shares. For example, you may have property held by two owners where one owner has a 75% share and the other owner has a 25% share. However, tenants in common still have an undivided interest in the property, meaning that they have the right to use and enjoy the entire property.
There is no right of survivorship. If an owner dies, that owner’s interests pass on to his or her heirs. A tenant in common can transfer their property interest via a will. If the tenant in common dies without a will (intestate) then Maryland’s intestacy laws would apply to that tenant in common’s share of the property.
Joint tenancy is a form of joint ownership of real property with two or more owners called “joint tenants.” The joint tenants have an undivided interest in the real property and the right of survivorship. While it is common for joint tenants to be spouses or parent and child, there is no requirement that the parties be married or related. Each owner has an equal, undivided interest in the real property.
Joint tenancy includes rights of survivorship. When one joint tenant dies, that joint tenant’s undivided interest in the real property automatically passes to the surviving joint tenant or tenants. Generally speaking, property with a right of survivorship is excluded from a deceased person’s estate, so it is not subject to a will. However, there can be exceptions to this general rule. So if you’re in this situation, it’s a good idea to talk to an attorney.
To create a joint tenancy under Maryland law, the language in the deed must be very clear that the parties intend to create a joint tenancy because Maryland has a presumption against joint tenancy. This means that documents, such as deeds, must expressly provide that the real property is to be owned as a joint tenancy for it to be legally recognized as such. Therefore, if purchasing real property with the intent of joint tenant ownership, explicit language indicating that intent is necessary. In the absence of this language, ownership will be assumed to be a tenancy in common.
Creation and maintenance of a joint tenancy also requires “four unities of interest” to be present. These “four unities” are four legal requirements related to the property that involve unified rights in terms of time, title, interest, and possession for all joint tenants.
Unity of Time – all owners’ interests must have vested at the same time (“vested ownership” means that the unconditional ownership of the property for all owners was completed at the same time)
Unity of Title – all owners’ interests must be acquired from the same deed
Unity of Interest – all owners have equal interests in the property
Unity of Possession – all owners have equal and concurrent rights to possess the property
Tenancy by the Entirety
Tenancy by the entirety is the third option for joint ownership of real property in Maryland. Unlike joint tenancy and tenancy in common, tenancy by the entirety is only available to a married couple.
Each spouse owns an undivided interest in the real property, and there is a right of survivorship. Maryland has a presumption that property held by a married couple is held as tenants by the entireties. The presumption applies to property acquired by the married couple. Tenancy by the entirety requires the presence of the four unities of interest described above.
Divorce of the owners will convert a tenancy by the entirety to a tenancy in common.
Determining the Ownership that's Best for You
Determining the ownership that’s best for you will really depend on the specific situation of you and your co-owners. Sometimes, the decision is out of your control. For example, you may have inherited a share of a property held by multiple owners in a tenancy in common. However, you may want to consider the questions below when making your choices.
Are you and the other owner married? Remember, tenancy by the entirety is only available to married couples.
Do you want the other co-owner to automatically inherit your share of the property when you die? Remember, a joint tenancy has a right of survivorship.
Are you aware of all the parties’ debts? A creditor may be able to claim part of the other owner’s share of the property.
Are you planning on selling or financing your home? You may need to get all of the parties to sign off on the sale or the financing.