Data-driven market and industry insights from Reonomy Research. Analysis of historical market data from select MSAs. Holding the title to a commercial real estate property can be managed in several ways that differ quite a bit from each other. From tax advantages to liability pitfalls, each type of commercial property ownership brings unique benefits and drawbacks, therefore it is important to understand each clearly before you take over a new real estate asset.
In this post, we will review the different types of property ownership in commercial real estate and discuss the pros and cons of each option. When looking to purchase commercial property, it is always wise to consult with a lawyer not only specializing in real estate, but also practicing in the state where the property is located.
Different types of ownership may be preferential for commercial property owners in different locales due to varying laws and other factors. The biggest appeal of sole ownership is that decisions about the property, such as how best to use it or when to sell, do not need to be approved by tenants or any other party aside from the owner. As you will see in the upcoming sections, this is not the case with property ownership scenarios such as joint tenancy and tenancy in common.
Sole ownership is commonly used for multi family rentals like duplexes and triplexes, small retail properties, as well as land. With a joint tenancy, two or more tenants own equal shares of a property. The tenants are entitled to equal rights, income, and use of the property, and can also benefit from sharing the mortgage and tax payments.
One of the most important aspects of a joint tenancy agreement is the right of survivorship. This means that if one or multiple tenants die, the ownership passes on to the surviving tenant.
Unlike probate, right of survivorship allows for ownership to be passed on easily after the death of one party. In order to enter into a joint tenancy agreement, the property conveyance or deed need to specifically state that a joint tenancy and rights of survivorship have been created. Joint tenancies however also come with a number of drawbacks, which can add a certain element of risk.
For example, if one of the tenants has unpaid debts, a creditor is legally entitled to collect what they are owed through the forced sale of the asset. In addition, each tenant must agree to the sale or transfer of the property, which can be very limiting.
Joint tenancies also have tax consequences. A tenancy-in-common property is owned by two or more persons at the same time. This type of ownership however can be split into different percentages among the tenants, hence it does not provide equal use, rights, or income.
Survivorship rights are not included under a tenancy in common. While they may look similar at first glance, these two types of property ownership differ in several ways. In both scenarios, the asset is co-owned by two or more parties. Home » Property Trends » Types of property ownership in India. Broadly, a property could be owned in two ways — one can be the sole owner of a property or one can own it jointly along with another person.
However, the joint ownership of a property can be of many types, a topic we would discuss at length in this article. This type of ownership is known as sole ownership or individual ownership of property.
It is pertinent to note that even if other parties have helped the owner to arrange funds for the property purchase, they do not have any right in the property, if the sale deed is registered only in the name of the principal buyer. The same is explained below with an example. Suppose a buyer has taken help from his wife, while arranging for the down payment for a home purchase. Suppose that he also makes his wife a co-applicant in the home loan application.
However, the property is ultimately registered in the name of the husband. In such a scenario, the property would be held individually by the husband. While it is correct that the wife will have a legal right over the property, because of the prevalent inheritance laws in the country, it will not have any impact on the fact that the property is owned solely by the husband. Individual ownership is beneficial for the title holder in many ways.
They hold the sole right to decide if and when they want to sell the property, legally speaking. In the example we spoke of earlier, if the husband were to sell his house, he is not legally bound to take his wife on board. He can single-handedly decide what to do with his property.
While the wife can claim her share in the sale proceeds, whether or not she gives her consent for the sale is immaterial as far as the legal formalities are concerned.
No permission from any other party would be required for the same. The division of such a property is also easier, because of the limited number of owners. When the owner dies, his property would be transferred under the provisions made in his will. Create account. Just need a one-off search? No login required, just pay as you go. One-off search. Get in touch with us today. Get Started. About InfoTrack. Our Stakeholders.
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