Four Ways To Own Real Estate in Florida

November 9, 2022by Brandon Banks

There’s more than one way to own Florida real estate. Especially if the property will have more than one owner — spouses, business partners, family members, etc. — how you take title can make a big difference in the rights and protections of the owners, as well as the future disposition of the property.

Each form of Florida property ownership will have strengths and weaknesses, depending on the owner(s), the property itself, and the intended use. If you need help understanding which is the right choice for your situation, don’t hesitate to seek professional assistance

Here are the four common types of real estate ownership available to Florida homeowners and investors.

Sole Ownership

When most single people acquire property in Florida, they choose sole ownership. It’s the simplest form of real estate ownership — you own the property, and no one else does. The sole owner has sole rights to access, occupy, improve, encumber, and/or dispose of the property.

Most married couples don’t choose this form of ownership for their personal residence. With sole ownership, one spouse would have no rights to the property and be completely at the mercy of the other spouse. 

However, married individuals often choose sole ownership for the acquisition of real estate as an investment. If the spouse will not participate in the investment at all — physically or financially — the spouse acquiring the property will often have the other spouse file a quitclaim deed. 

A quitclaim deed, rather than establishing ownership of the property, relinquishes ownership of the property — the spouse asserts no ownership rights to the property. The quitclaim deed helps prevent any future assertion of joint tenancy or tenancy by the entirety by the spouse, the courts, or another party. This is for the protection of both spouses, as joint tenants or tenants by the entirety are susceptible to claims by creditors against the other tenant.

Pros of Sole Ownership

The main benefit of sole ownership is that it’s easy. One person owns the property, and does not need to get the permission or cooperation of any other party to transfer or dispose of that ownership interest.

Cons of Sole Ownership

The disadvantage of sole ownership is that if the owner dies or becomes incapacitated, the property automatically goes into probate, a legal proceeding ordered by the court to dispose of the decedent’s estate in an orderly fashion. 

Even if the sole owner leaves a will with specific instructions for the estate, probate is a costly and time-consuming proceeding. If the sole owner dies intestate (without a will), the process is even costlier and more time-consuming.

Tenancy In Common

Tenancy in common (or TIC for short) is the first of three ways in which multiple people can take ownership of the same Florida property at the same time.

With tenancy in common, each co-owner owns (on paper) a discrete and separate ownership interest in the property. It doesn’t have to be 50/50. There could be three tenants in common, one of them owning 65%, another 30%, another 5%.

Note that despite differing sizes of ownership interest, every tenant in common is assumed to have equal rights to access and occupy the property, unless established by the tenants in common according to a separate agreement.

This is common for real estate investors, each of whom may be putting different amounts of money or effort into the deal.

Moreover, tenancy in common does not have to be established at acquisition. Someone could own 100% of a property, then sell or transfer a 40% ownership interest, and the original owner and the new co-owner are now 60/40 tenants in common. 

Pros of Tenancy in Common

Like sole ownership, TIC is a relatively straightforward form of property ownership, easy to paper up. 

Each tenant in common has the right to do with their ownership interest what they choose. A tenant in common could sell or transfer their ownership interest (or part of their ownership interest) to someone else, or bequeath it to someone in a will. 

Tenants in common can also use their portional ownership interest as collateral for loans (but not a mortgage loan against the entire property). If one tenant in common gets sued, the plaintiff can only claim the ownership interest of that one tenant in common, not the entire property.

Cons of Tenancy in Common

The most obvious advantage of tenancy in common is also the most obvious disadvantage — one tenant in common can sell or transfer ownership to anyone. This could leave the other tenants in common with a roommate or co-owner they didn’t get the chance to choose or screen.

While tenants in common can sell or will their individual ownership interest as they see fit, to sell or otherwise dispose of the entire property, all tenants in common need to agree to the sale. If one tenant in common refuses, the entire sale could be scuttled. 

Each tenant in common must also agree to any loans taken out against the property. If one tenant in common refuses, the loan won’t close because mortgage lenders want the entire property as collateral, not just a portion of it.

Moreover, if the tenants in common do take out a loan against the property — or if a tax lien or mechanic’s lien is placed on the property — each tenant in common is jointly and severally liable for the loan. 

What that means is that each tenant in common can be held fully responsible for the entire loan balance and payment, not just a portion of the loan balance or payment proportional to their ownership interest. I.e., if one tenant in common skips on the loan, the other tenant in common is fully liable for the entire loan.

Finally, if one tenant in common passes away or becomes incapacitated, his/her ownership interest goes into probate, just as with sole ownership. 

Joint Tenancy

Joint tenancy is a form of co-ownership of property, but it differs from tenancy in common in several critical ways. 

Joint tenancy must be established at the time of acquisition. Joint owners of Florida real estate have equal ownership shares. If there are two joint tenants, they have 50/50 ownership interest. Four joint tenants? Each one is a 25% owner.

One of the most distinctive traits of joint tenancy is the right of survivorship. This means that if one joint tenant dies or becomes incapacitated, that joint tenant’s ownership reverts automatically, and equally, to the other joint tenants. 

For example, if one property has three joint tenants, they each have one-third interest in the property. If one of the joint tenants passes away, the property now has two joint tenants, each with 50/50 ownership. There’s no need for a will — this happens automatically with joint tenancy.

Family members often use joint tenancy to protect and consolidate the rights to property that they mean to keep in the family.

Pros of Joint Tenancy

The most important benefit of joint tenancy is that if a joint tenant dies, there’s no need for probate. Even if the joint tenant dies intestate, the ownership interest immediately reverts to the surviving joint tenant(s), with none of the delays or costs of probate court.

Joint tenants do not have to be married. Anyone who wants to can establish joint ownership in this way.  

Cons of Joint Tenancy

The biggest disadvantage of joint tenancy is that each joint tenant’s ownership interest cannot be sold, transferred, or willed separately. If one joint tenant wants to sell or borrow against the property, (s)he must obtain the signatures of all joint tenants for the transaction to be legally binding. 

Joint tenancy is also risky because the actions of one joint tenant may have repercussions that affect the other joint tenants. If one joint tenant is sued by a creditor, the judge can order the sale of the property to settle the judgment, even if the other joint tenants had nothing to do with the creditor or the suit. 

Tenancy By The Entirety

Tenancy by the entirety is the one of the most popular ways for married couples to acquire property in the state of Florida. (For the record, Florida is not a community property state.)

Tenancy by the entirety (or TBTE for short) is a type of property ownership only available to married couples. In TBTE, each spouse is a 100% owner of 100% of the property as long as both spouses are alive and remain married. 

If the couple divorces, ownership reverts to 50/50 tenancy in common.

Pros of Tenancy By The Entirety

TBTE has one advantage in common with joint tenancy — if one spouse dies or becomes incapacitated, neither the entire property nor any portion of the interest in that property goes to probate. Instead, 100% sole ownership reverts to the surviving spouse.

TBTE also protects the rights of each spouse by requiring the other spouse to sign off on any transfer, sale, or encumbrance of the property.

An advantage of TBTE over joint tenancy is that it protects one spouse from the creditors of the other spouse. If one spouse is sued by a creditor, the property cannot be claimed to satisfy a judgment.

Cons of Tenancy By The Entirety

Of course, the responsibility to the spouse means that the other spouse cannot sell, transfer, or borrow against the property at will. If the couple gets divorced, one former spouse can sell, transfer, or otherwise dispose of the resulting tenancy-in-common interest without the approval of the spouse.

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