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Dear Mr. Feichthaler:
I am purchasing a house with my sister in Cape Coral. We are wondering how to hold title. We each have our own families, and we are just pooling our assets to buy this rental home. Our friends said we should hold the property as joint tenants because we are buying the house together.
Nancy N.
Dear Nancy:
Rental properties, like many homes, are continuing to be listed on the market, which may give you an excellent opportunity to make a deal. There are several ways you can hold property, including: Joint tenancy (with rights of survivorship), Tenants in Common, or in a Trust or LLC. As joint tenants, you will each be viewed as owning 100% of the property together. The key element to this type of ownership is that, if one of the owners dies, the surviving owner receives their ownership interest by operation of law, thereby avoiding probate. You had mentioned above you each have your own families, so you may want to consider whether you would want your share to pass to your sister. If so, holding the property as Joint Tenants is an ideal way to hold property.
In the alternative, if you wish to have your other family members (or other beneficiaries) receive the benefit of this property, you would want to hold the property as Tenants in Common. Your interest would pass to your estate through your will, or through intestate succession if you have no will. Your interest would go through probate, unless you took other steps to see that your interest passes to your heirs through operation of law, like a life estate deed. You could form a living trust to hold your interests as well, especially if you seek to have your interest avoid probate, while providing a structure to manage the ownership of your assets until your heirs are old enough to manage their own affairs.
Before making this significant investment, you may want to consider other methods of holding title to protect your personal assets, such as forming a limited liability company. By holding the property in an LLC, liability relating to the rental home will be limited to the value of the LLC, and any potential liability should not spread to your personal assets.
Eric P. Feichthaler has lived in Cape Coral for over 37 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Cape Coral to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continues his service to the community through the Cape Coral Caring Center, and Cape Coral Kiwanis where he serves as president. He has been married to his wife, Mary, for 24 years, and they have four children. He earned his board certification in Real Estate Law from the Florida Bar, and primarily practices in real estate law and wills and trusts. He is AV Preeminent rated by Martindale-Hubbell for professional ethics and legal ability, and is a Supreme Court Certified Circuit Civil Mediator. He can be reached at eric@capecoralattorney.com, or 239-542-4733.
This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.