Joint ownership of assets is a way of two or more people to own shares in an asset. The asset generally is real estate but can be other property such as a brokerage account, insurance company products or any other valuable property. The concept of joint tenancy is the transfer of the asset to the survivor or survivors. When one person dies, the asset immediately becomes the ownership of the surviving owner or owners. These assets will be transferred without the need of a will or any probate action.

Many different forms of joint ownership are available but the most common use is "joint ownership with right of survivorship." This could be effective for spouses or could also be used for transfer between a parent and a child or children.

Property owned in joint tenancy automatically passes without any need for probate to the surviving owner or owners when death occurs to one of the owners. There is no cost to set up joint tenancy other than forms or a small legal expense if an attorney is used. Also joint tenancy is considered a private issue and the transfer is made without public notice.

Numerous pros and cons of joint tenancy decisions exist. Adding a child to a real estate asset may change the step up in tax basis for the portion of the value of the asset. This may have a future tax issue for the survivor. Also, adding another person to the ownership of an asset is a gift and once given it cannot be taken back. The value of the gift could also be in violation of gifting laws and it is important to understand your gifting options. By simple understanding the gifting options will offer you more choices in planning.

Like all estate planning issues, it is important to understand legal and tax liability possibilities. Always seek legal and tax advice for areas you do not fully understand.

By: Bill Broich
Obtain a free guide about investing in annuites: Annuity Investing Advice.

Submitted by:
Tom Reynolds
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If you deal with receiverships, this case will be of interest to you. A lender, a borrower and a court-appointed receiver have been battling one another in an Indiana federal court in connection with a failed construction project. Problems arose when a partially-constructed apartment complex deteriorated so much during a foreclosure suit that a judge condemned the property and ordered it to be demolished, resulting in damages alleged by the borrower of $4,167,881 (representing the purported value of the property pre-suit minus the value of the foundations of the buildings after demolition). In Judge Philip P. Simon’s words, “assessing who is at fault for this mess is at the center of the action currently before the Court.” In rulings filed September 18, 2006 and October 16, 2006, the Northern District’s Judge Simon brought some order to the chaos in case no. 2:02cv368, Four Winds v. American Express Tax and Consulting Services, et al. The cite to the September Opinion, which relates to the borrower’s claims against the receiver, is 2006 U.S. Dist. LEXIS 71349. The October Opinion, which addresses the receiver’s cause of action against the lender, can be found at 2006 U.S. Dist. LEXIS 75581.

Lender spanked. The litigation began when the lender decided to foreclose. The borrower filed a counterclaim asserting wrongful foreclosure because there had been no default. The borrower convinced the court that no default occurred, so the court dismissed the foreclosure aspect of the case. The lender then settled with the borrower for a “hefty amount” on the counterclaims.

Receiver faces trial. The borrower also is pursuing the receiver for negligently failing to protect and preserve the project. An agreed order governed the receiver’s conduct, and the issue is whether the receiver was grossly negligent. The receiver sought a dismissal of the claim by submitting evidence that it did not act with gross negligence. In fact, the receiver undertook at least some measures to protect the property. But Judge Simon ruled that the case must go to the jury to decide factual issues, including: (1) how the project would have faired had the receiver not undertaken the protective measures that it did, (2) how much damage would more extensive protective measures have prevented, (3) why the receiver did not apply to the court for permission to complete the project or for funding to implement more extensive measures, (4) how many times should the receiver have visited the project and (5) whether the receiver was grossly negligent in fulfilling its duties as the receiver. The case is set for a jury trial on February 20, 2007.

Receiver v. lender dismissed. The receiver, in turn, had its own negligence claim against the lender, which claim really was about seeking reimbursement for any damages the receiver might have to pay to the borrower. The receiver pointed the finger at the lender, arguing that the lender controlled the receiver’s actions through the funding (or lack thereof) of the receivership. Judge Simon held there was no legal basis for the receiver’s position, however, and dismissed the claim. If any negligence-based duties flowed between the parties, they flowed from the receiver to the lender, not vice versa. Thus the receiver, if found to be grossly negligent, cannot recoup any losses from the lender (although the receiver may be entitled to a credit/set-off for the money the lender paid to the borrower.)

Interestingly, the agreed order appointing the receiver required the receiver to preserve and protect the property with receivership funds, even though there were no “receivership funds” to do so because the property generated no income. That catch-22 may have been the property’s downfall. The receiver was responsible for directing the preservation of the property, but on whose dime? Evidently there was an informal arrangement whereby the lender funded the receivership. That went okay at the beginning, but the problems and costs later seemed to snowball out of control. I gather that, if and to the extent the receiver was negligent, it was due in part to inadequate funding by the lender. The confidential “substantial” settlement the lender paid to the borrower supports my speculation.

Lessons. Even though the lender won its legal battle with the receiver, the lender had already lost when the project failed and the borrower forced the lender to settle. There are some lessons here for lenders (and receivers):

- Ensure there is a default before a foreclosure case is initiated

- Spell out in the receivership order exactly how the receivership will be funded

- Clarify in the order the duties of the receiver, and the borrower or lender as warranted

- If the lender agrees to fund the preservation of the property, it should take reasonable steps to do so and should not unreasonably permit a project to deteriorate substantially in value

But perhaps the greatest lesson is - in cases of construction loans where the collateral is being built - lenders should foreclose and appoint a receiver only as a last resort.

By: John Waller
John D. Waller is a partner at the Indianapolis law firm of Wooden & McLaughlin LLP http://www.woodmclaw.com. He publishes the blog Indiana Commercial Foreclosure Law at commercialforeclosureblog.typepad.com John’s phone number is 317-639-6151, and his e-mail address is jwaller@woodmclaw.com

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I am a [by default, in Arizona, a “limited” attorney] Real Estate Broker. Real estate brokers are held to a high standard in tenant and landlord real estate law. Thus, on several Expert web sites, I answer questions about “what can I do, my landlord is……..” Or “my tenant has……………, what can I do”?

It is known that across America, people move from their primary residence about seven times in their lifetime. Much of that occurs during the summer, either after a vacation or in lieu of one. It is my hope that for those of you in that mainstream who are moving,and I mean from one rental property to another, that these bits and pieces of data will help you so you don’t wind up with someone mad at you and money lost.

First, all tenants are lease-holders, in writing or otherwise. IF not specifically a week to week [out of the ordinary but quite legal] agreement, and if not in writing, your lease is a month- to- month. If it is in writing, it is for 2 months or longer. Its duration can be for any mutually agreeable length—agreeable between landlord and tenant. In this data I am not separating property owner from landlord; the law is the same.

LANDLORDS may perform credit checks, ask for security and cleaning deposits, and demand cash. They must provide a clean, safe and working unit [whether bedroom, apartment or house/condo].

If a tenant lies on an application, and if the contract so stipulates that lies are grounds for eviction, the tenant obviously must tell the truth or he can be evicted at any time if a lie is uncovered.

IF the lease is for 1 year or longer, either side, when the calendar shows two months till expiration of the year, inform the other if they intend to stay or if they are to leave, as the side’s position may be.

On a month to month, a full month’s notice is needed.

WHEN a tenant must leave before the lease expires or before the end of the 30 days; and is sick, suddenly without work, gets a job elsewhere, mom in anther state dies, etc., it is not the responsibility of the landlord. No state has an early -OUT provision. One’s reason for leaving is not relevant! Yes, if the tenant can get the landlord to waive the current expiration date of the lease and without penalty of any kind, then the tenant’s responsibility is eliminated upon exiting the unit. [Presuming the unit is left clean and said condition is mutually agreed upon.]

What may a tenant do, in his/her unit? Anything legal and not against the limitations, if any, of the landlord's lease. CAN a tenant have anyone over as a guest? YES until that tenant becomes a "bother to the peace." IF a guest gets rowdy, and hurts someone, is the tenant responsible? of course!

IF a tenant sells drugs from his unit, can he be evicted? OF course. NO illegal acts may be commited in the tenant's unit or on the grounds!

IF a unit's air conditioning fails, must a landlord fix it! YES, and quickly! I, as an owner, had to replace an AC unit the week after I bought a four plex!

CAN a tenant withhold rent if something goes bad within his/her unit? NO! BUT if the landlord does not fix the problem within 30 days [written notice by the tenant], the tenant may hire that work out, and submit the PAID invoice to the landlord along with reduced rent.

IF a unit has become unsafe--fire, flood, etc, a tenant can leave immediately via the term CONSTRUCTIVE EVICTION.

Can a landlord fight this? Sure. If the landlord can show the tenant is actually responsible for the problem, the tenant must pay for the return to a safe condition and pay rent concurrently.

IF a tenant has an emergency and cannot pay rent, can the landlord throw him out? NO!

ALL tenants must have a judgment against them by a court before a landlord can get the tenant physically removed.

CAN a landlord without notice, enter a tenant's unit? NO.

IF a tenant has paid a deposit and first month rent and finds he cannot move in but must be elsewhere, can the landlord claim both deposit and first month rent? Depends on how soon from time of not being able to move in till lease was to start! A deposit is required because of the concept of LIQUIDATED damages. IF the lease is to start in one week, the tenant will lose his deposit but get back his rent.

By: K. Kemper
I am available to answer questions like this on Kasamba and other expert sites.

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What is a tenancy in common (TIC)?

The acronym "TIC", which stands for tenancy in common, along with the terms "cotenancy" and "fractional ownership", refer to arrangements under which two or more people co-own a parcel of real estate without a "right of survivorship". This type of co-ownership allows each co-owner to choose who will inherit his/her ownership interest upon death. By contrast, the type of co-ownership called "joint tenancy" requires that each co-owner's interest pass to the other co-owners upon death.

The TIC has become a popular style of ownership in many different real estate contexts. For example, income property investors and real estate syndicators are increasingly using tenancy in common as a vehicle to facilitate income tax-deferred exchanges, a trend that has been propelled by recent IRS rulings recognizing certain tenancy in common structures as legitimate vehicles for these exchanges. At the same time, vacation home buyers and resort developers are increasingly using tenancy in common (often called "fractional ownership" in this application) to share ownership and usage of vacation properties so that owners need not buy more than they can use and afford, but still get legal title to real estate (unlike in a traditional 'time share' arrangement).

This article will focus on a third common usage of tenancy in common which is the co-ownership of multi-unit property by co-owners who each wish to have exclusive usage rights to a particular area of the property. TIC owners own percentages in an undivided property rather than particular units or apartments, and their deeds show only their ownership percentages. The right of a particular TIC owner to use a particular dwelling comes from a written contract signed by all co-owners (often called a Tenancy In Common Agreement), not from a deed, map or other document recorded in county records. This type of tenancy in common co-ownership should not be confused with the legal subdivisions known as the "condominium" and the "stock cooperative", as discussed below.

What is the difference between a tenancy in common and a condominium?

In a condominium, property has been legally divided into physical parts which can be separately owned. Each condo owner owns a particular area of the property which is delineated on a map recorded in the public records, and has a deed which identifies the area which is individually owned. By contrast, TIC owners own percentages in an undivided property rather than particular units or apartments, and their deeds show only their ownership percentages. The right of a particular TIC owner to use a particular dwelling comes from a written contract signed by all co-owners (often called a Tenancy In Common Agreement), not from a deed, map or other document recorded in county records. The difference between physical division of ownership in county records (as in a condominium) and an unrecorded contract allocating usage rights (as in a tenancy in common) is significant from both regulatory and practical standpoints, as discussed below.

What is the difference between a tenancy in common and a cooperative?

In a "stock cooperative" or "co-op", a corporation or other legal entity owns the property, and the owners of that entity each hold shares of the entity along with usage rights to a particular apartment (often but not always expressed in a document called a proprietary lease). In most locations, a stock cooperative is legally recognized as a form of subdivision, and this recognition brings co-op ownership within the scope of most local subdivision restrictions and regulations. As a result, laws that restrict or prohibit the conversion of apartment buildings into legal subdivisions such as condominiums generally impose those same restrictions and prohibitions on the conversion of apartment buildings into stock cooperatives. In practice, this means that if you can convert to a co-op, you can also convert to a condo, and you would always choose the condo conversion over the co-op conversion because condos are easier to sell and finance. On the other hand, if it is burdensome or impossible to convert to a condo, the same difficulties will apply to a co-op conversion, but will not apply to TIC conversion. That is why people form tenancies in common rather than cooperatives.

Why have TICs become so popular?

As the price of real estate continues to rise, and communities adopt ever stricter growth and condominium conversion restrictions, more and more people are turning to tenancies in common and other non-traditional co-ownership structures as a way to maximize their buying and selling power. These arrangements lower prices and increase choice for buyers by allowing them to pool resources and buy more real estate than they otherwise could or would, while agreeing among themselves on an allocation of rights and responsibilities so each buyer does not end up with more than he/she needs. At the same time, tenancy in common arrangements increase sale prices and marketing options for sellers by allowing them to sell fractions of their property to buyers for prices that generally add up to more than what the seller would receive from a single buyer. The popularity of tenancies in common has been further enhanced by the recent introduction of "fractional loans" which allow co-owners to have individual mortgages, substantially decreasing the risk of co-ownership.

Why not form an LLC or limited partnership instead of a tenancy in common?

Limited liability companies (LLCs), limited partnerships, and corporations are entities that can provide a variety of management and liability protection advantages over direct fractional ownership arrangements such as tenancy in common. But for co-ownership groups who plan to occupy some or all of the co-owned property, the legal and tax disadvantages created by these entity structures generally outweigh the benefits. Specifically, under generally accepted interpretations of tax laws, owners of LLC memberships, limited partnership interests or corporate shares are not considered to own real estate (unless the entity qualifies as a stock cooperative), and therefore cannot claim the tax benefits of real estate owner-occupants such as the ability to deduct mortgage interest and property tax, and the ability to claim the $250,000/500,000 tax-free gain on resale. If the LLC, limited partnership or corporation can be deemed a stock cooperative, it is likely to encounter regulatory barriers as discussed above. Can a tenancy in common owner sell his/her own interest?

Each cotenant can sell his/her tenancy in common interest at any time and, contrary to what many people unfamiliar with tenancies in common assume, TIC interests have been readily re-salable for at least the past 10 years. Sales of TIC interests involving group loans are typically subject to rights of first refusal and buyer approval to insure that the co-owners can vet prospective buyers and make sure they are qualified. Marketability is enhanced if, by resale time, the group has a track record of solving its problems and paying its bills, greatly decreasing the buyer's risk. What legal restrictions apply to TIC formation?

The legal restrictions applicable to tenancy in common formation and ownership vary from state to state. In California, appellate courts have recognized a distinction between recorded and unrecorded documents assigning usage rights, and this distinction means that local laws restricting or prohibiting the conversion of apartment buildings into legal subdivisions such as condominiums do not apply to the creation of a tenancy in common arrangement so long as no document deeding or otherwise assigning usage rights is recorded in public records. Consequently, tenancy in common formation does not require any filing or approval with local governmental agencies (such as counties, cities or towns).

On the other hand, tenancy in common formation in California does require the approval of the California Department of Real Estate (DRE) if the property to be co-owned and occupied by the group contains five or more residential units. The DRE approval process currently takes 6-9 months to complete, and results in the issuance by DRE of a "Public Report" (often called a White Paper). The Public Report contains extensive information and disclosures about the property and the tenancy in common group, and must be given to all prospective buyers. Resale of tenancy in common interests are generally allowed without a Public Report, but the rules defining what constitutes a true "resale" (as opposed to a sham designed to circumvent approval requirements) are strict.

Over the years, San Francisco lawmakers have tried on various occasions to restrict or discourage tenancy in common formations indirectly. In each instance, these measures have proven to be ineffective or been rejected by the courts. The most recent effort (in 2001) attempted to make tenancy in common ownership more risky by making exclusive occupancy agreements (even unwritten or implied ones!) illegal and unenforceable. The law was held a violation of the constitutional right of privacy by the California Court of Appeal in 2004. The Court specifically recognized that strict constitutional limitations apply to the ability of government to interfere with co-owners' private internal arrangements relating to usage of their shared property, and stated that keeping owners and their apartment buildings in the rental housing business is not a sufficiently strong governmental interest to justify such an interference.

By: D. Andrew Sirkin
D. Andrew Sirkin is a recognized expert in co-ownership forms including condominiums, TICs, equity sharing and co-housing. He is an accredited instructor with the California Department of Real Estate, and frequently conducts co-ownership workshops for attorneys, real estate agents, corporations, and prospective home buyers. Mr. Sirkin's specialty is tenancy in common.

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