Most people assume that if you
own property, you own property, and that’s the end of it. However, when more than one person owns that
property, South Carolina law provides for several different ways to hold
title. Three methods are covered below,
and this article should be considered a brief overview of the differences
between the three. As in all legal
situations, many factors go into deciding what’s right for you, so please ask
questions and share information with your lawyer before choosing one
option. Also, don’t be fooled by the word
“tenant” in these descriptions – although we typically think of a tenant only
in a rental situation, the legal definition includes owners as well as renters.
(1) Tenants In Common.
This is the most common way for multiple people to own property – “John
Doe and Jane Roe.” In this situation,
each person owns an undivided interest in the property. This interest is usually 50/50 (or equally
shared if more than two), but it doesn’t have to be. Tenancy In Common can be divided among the
owners in any percentages the owners may choose. If you own property as a Tenant In Common, you
can sell or transfer your interest in the property to someone else, without the
consent of the other co-owners. When one
of the owners dies, that person’s interest in the property passes through his
or her estate, and will ultimately be owned by the deceased person’s heirs or
devisees.
(2) Joint Tenants with Rights of Survivorship. This is an increasingly common way to hold
title, especially among married couples or other family members. As with Tenants In Common, Joint Tenants own
the property in undivided shares, and may transfer their interests to others. However, any transfer to a third party will
sever the Joint Tenancy and convert the ownership to Tenants In Common. The benefit to holding title as Joint Tenants
with Rights of Survivorship is this: when one of the owners dies, that person’s
interest does NOT pass through his or her estate, but instead automatically
transfers to the surviving owner(s).
Many married couples and families use this as part of their estate
planning.
(3) Tenants In Common with Rights of Survivorship. As you might think, this is basically a
combination of the previous two methods of holding title. However, there is one important difference. In this situation, one owner may NOT transfer
his or her ownership interest to a third party without the consent of the other
co-owner(s). In other words, if you
change your mind about your ownership interest, or even if you get divorced
from your spouse, the way title is held cannot be changed without the
participation and consent of all owners.
There is a potential advantage to holding title in this way, although
South Carolina courts have not yet ruled on this issue. In other states that recognize this estate,
creditors cannot reach the property to satisfy debts of only one owner, but can
only reach the property to satisfy joint debts of all owners. The Right of Survivorship aspect of this
ownership also means that upon the death of one owner, that owner’s interest
vests automatically, without going through probate, in the surviving owner(s). Therefore, if South Carolina ultimately
limits creditors’ rights in this setting, holding title as Tenants In Common
with Rights of Survivorship could become an important asset protection tool, as
well as an estate planning tactic.