Although the forms of ownership available are controlled by state laws, a fee simple estate may be held in three basic ways:
- In severalty, where title is held by one individual
- In co-ownership, where title is held by two or more individuals
- In trust, where a third individual holds title for the benefit of another
OWNERSHIP IN SEVERALTY
Ownership in severalty occurs when property is owned by one individual or corporation. The term comes from the fact that this sole owner is “severed” or “cut off’ from other owners. The severalty owner has sole rights to the ownership and sole discretion to sell, will, lease, or otherwise transfer part or all of the ownerships rights to another person.
Sole ownership of property is quite common in Illinois, and title held in severalty presents no unique legal problems. However, when either a husband or wife owns property in severalty, lenders, grantees, and title insurers in Illinois usually require that the nonowning spouse sign in order to release any potential homestead rights. This is true for both listing and sales contracts. A non-owning spouse who is a minor will also have to sign.
CO-OWNERSHIP
When title to one parcel of real estate is held by two or more individuals, those parties are called co-owners or concurrent owners.
Undivided Interest (Ownership)
In Co-Ownership, the physical property, however, is not divided into a specific half or third. Hence, it is called an undivided fractional interest. The co-owners have unity of possession, meaning they are entitled to possession of the whole property. It is the ownership interest, not the property, that is divided. Three different owners cannot own a floor each in the three flat they own.
Tenant in Common
A parcel of real estate may be owned by two or more people as tenants in common. In a tenancy in common, each tenant holds an undivided fractional interest in the property. A tenant in common may hold, for example, a one-half or one-third interest in a property.
Some Features of Tenant in Common
- If no fractions are stated, the tenants are presumed to hold equal shares. For example, if five people hold title, each would own an undivided one fifth interest.
- Because the co-owners own separate interests, they can sell, convey, mortgage, or transfer their individual interests without the consent of the other co-owners.
- No individual tenant may transfer the ownership of the entire property.
- When one co-owner dies, the tenant’s undivided interest passes according to the co-owner’s will, heirs, or living trust.
- In Illinois, Tenant In Common can be conveyed by a single deed which may show the proportional interests of each tenant in common.
- When a single deed is used, lack of a description of each tenant’s share means all tenants hold equal, undivided shares.
- In Illinois Tenant in Common can be conveyed by a separate deed issued to each tenant in common which shows his or her or their individual proportional interest.
- In Illinois, the law presumes that two or more owners hold title as tenants in common if the deed does not state specifically how title is to be held.
Joint Tenancy
The unique feature of joint tenancy is unity of ownership and can be described as a special bond between the owners. Each tenant holds an undivided fractional interest in the property. In Joint Tenancy, all shares must be equal.
Right of Survivorship — Joint Tenancy
Some features of the Right of Survivorship:
- Ownership in Joint Tenancy cannot pass to their heirs on the death of the joint tenant.
- Upon the death of a joint tenant, the deceased’s interest transfers directly to the surviving joint tenant(s). Essentially, there is one less owner.
- A will has no effect on a deceased joint tenant’s property.
- With each successive joint tenant death, the surviving joint tenants keep acquiring the deceased tenant’s interest.
- The joint tenancy continues until only one owner remains.
- The last survivor takes title in severally and has all the rights of sole ownership, including the right to pass the property to any heirs
Creating Joint Tenancies
- A joint tenancy can be created only by the intentional act of conveying a deed or giving the property by will.
- It cannot be implied or created by operation of law.
- The deed must specifically state the parties’ intention to create a joint tenancy
- The parties must be explicitly identified as joint tenants.
Four “unities” are required to create a joint tenancy:
- Unity of possession – all joint tenants holding an undivided right to possession
- Unity of interest – all joint tenants holding equal ownership interests
- Unity of time – all joint tenants acquiring their interests at the same time
- Unity of title – all joint tenants acquiring their interests by the same document
The four requirements for unities include the following:
- Title is acquired by one deed.
- The deed is executed and delivered at one time.
- The deed conveys equal interests to all of the parties.
- The parties hold undivided possession of the property as joint tenants.
Illinois allows a sole owner to execute a deed to herself and others “as joint tenants and not as tenants in common” in order to create a valid joint tenancy.
