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Welcome to our Library, which provides legal information on topics related to the firm's practice areas. This information is not meant to be a substitute for receiving personal legal advice from an attorney. For specific inquiries about legal issues, we invite you to contact us at (843) 626-9000. We update this section throughout the year, so please check back for new articles. We also welcome suggestions on topics for future articles and news.
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Jeffcoat Law Firm Article
Determining the Best Way to Own Real Estate in North Carolina
By Otis Allen Jeffcoat, III
Before purchasing Real Estate in North Carolina, consider these points:
If you want to purchase property in two or more individual names, you have at least two options. If the owners are married to each other there is a third option available. The options are:
- Joint Tenants with Right of Survivorship
- requires special language to be inserted in your deed, either at the time of purchase or by a reconveyance to yourselves
- on the death of the first owner, the surviving owners automatically take title to the deceased owner’s interest in the property regardless of the deceased owner’s will
- the transfer of title due to the death of an owner avoids probate as long as there are surviving owners
- Tenants in Common
- requires no special language to be inserted in the deed this form of ownership is the default for multiple owners who are not married to each other
- on the death of an owner, the title to the deceased owner’s interest is transferred according to his or her will or by state intestacy laws if no will is found the transfer of ownership interests passes through probate
- Tenancy by the Entirety
- property can only be held in Tenancy by the Entirety by owners who are married to each other
- on the death of the first owner, the surviving owners automatically take title to the deceased owner’s interest in the property regardless of the deceased owner’s will
- the transfer of title due to the first death of an owner avoids probate
- this form of ownership is the default for two owners who are married to each other
- One party can not unilaterally divide the property -- the Tenancy can only be divided or destroyed by mutual agreement of both parties, a divorce or annulment
- The creditors of an individual owner can not attach and sell the property to satisfy their claims - Only creditors of both owners may use the property to satisfy a debt or other obligation
The way property is held by joint owners is a useful tool in estate planning. Usually holding property as Joint Tenants or Tenants by the Entirety is the preferred method due to ease of transfer upon death, however certain tax considerations often necessitate holding real property as Tenants in Common.
Assume John and Mary decide to purchase property in North Carolina, holding title in both names. Consider the following examples:
If John and Mary take as Tenants in Common and John later dies, Mary may have difficulty is selling or refinancing the property, depending on the laws of their home state, whether John had a will and the provisions of John’s will. In many cases some type of probate proceeding in North Carolina will be necessary.
If John and Mary take as Joint Tenants with a Right of Survivorship and John later dies, Mary should be able to sell or refinance the property immediately upon production of a certified Certificate of Death for John. There will not be any need for a probate proceeding.
If John and Mary take as Tenants by the Entirety and John later dies, Mary will have the same rights of survivorship described above and during John’s life both will have additional protection from creditors. However, this option is available only if John and Mary are married to each other.
If John and Mary have a taxable estate larger than $1,000,000.00, to avoid or decrease the estate tax burden on the second spouse to die, it is often important to keep the surviving spouse from holding much of the deceased spouse’s property. This is often accomplished by a will devising the deceased property into a trust account rather than the other spouse. Because Joint Tenancy with a right of Survivorship or Tenancy by the Entirety prevents the property from passing through the deceased spouse’s estate and being disbursed according to their will, it is often necessary to hold the property as Tenants in Common.
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The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.
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