Legal Forms of Asset Ownership

When you "own" property, you have the exclusive rights to possess and control the property, to use the property for pleasure or for profit, and to dispose of the property during lifetime by contract, deed, grant, or lease; or to dispose of it at death, by inheritance, by bequest, or devise. You also have the responsibility for all expenses and other charges in connection with the property.

When one person owns the property, all of these rights and responsibilities are vested in that individual. When two or more persons own the property, there must be some method of allocating the rights and responsibilities between the various co-owners. The rules governing the rights and duties of property co-owners are determined by state laws and, therefore, are somewhat different in each of the various states.

Most states have adopted the laws handed down from the old English common law system, and continue to use the old terminology, such as "tenant" meaning owner and "tenancy" meaning ownership. (Note that those terms have also been adopted in a landlord/tenant relationship, and it does not signify ownership in that case.) In addition, a few states, when dealing with property held jointly by a husband and wife, have borrowed from the civil laws of Spain and France and have adopted a system of community property or "marital property."

The laws of the state in which the property is located usually prevails. For example, if a person who resides in Illinois owns a parcel of property located in Alabama, the laws of Alabama will determine the ownership rights and the form and content of the various legal documents and procedures involved in the selling, leasing, financing, inheritance, bequest, or devise of the property.

There are four types of co-ownership:

• Tenancy in common -- used when property is held by two or more persons and, upon death, each owner's interest passes to his or her heirs.
• Joint tenancy with right of survivorship -- also used when property is held by two or more persons, but upon death the property passes to the surviving joint tenant(s).
• Tenancy by the entirety -- a type of joint tenancy that applies only to husband and wife during the marriage -- and exists in only some of the states.
• Community property -- a form of co-ownership that applies only to husband and wife living in a community property state.