Are you about to buy land in Colorado with a friend, business
partner, or family member? Before signing the purchase agreement,
consider how you will hold your title as co-owner of your new
property.
In Colorado, land titles with co-owners can either be held as
tenants in common or as joint tenants. It is important to know the
difference between the two ways to co-own property and what
consequences you may have if one owner exits ownership either
voluntary or involuntary.
Tenancy In Common
If not stated in the title, Colorado law defaults to tenants in
common. Tenants in common means that any two or more persons
or entities will own their percentage of the divided interest in the
property. The split percentage of an individual person or entity can
be transferred through a sale or inheritance.
In a tenants in common situation, each co-owner can take possession
of the entire property. Each co-owner can transfer their own
interest in the property without the other co-owner(s) consent.
Buyers entering tenants in common land purchases should consult
a professional that can guide them on how to clearly define
operating agreements on what should happen when one or more of
the people or entities end their ownership of the property such
as in cases of death, bankruptcy, etc.
Joint Tenancy
Joint tenancy must be explicitly stated in the deed "as joint
tenants with right of survivorship" or simply "JTWROS".
Joint tenancy automatically conveys interest of the property in
the case of death of one or more of the co-owners. LLCs and trusts
cannot enter into joint tenancy since ownership is terminated at
death. Probate is not required for joint tenancy and proof of death
(a death certificate) should be filed with the county records to
prove that the interest in the deceases party has transferred to the
remaining owner(s).
When
one owner wants to transfer ownership in their interest in the
property without consent from the other joint tenants, then
joint tenancy is often severed. Severing joint tenancy can
occur through a sale, bankruptcy, divorce and other situations
and will often result in the property being owned with the new
owners as tenants in common. In some joint tenancy situations
with three or more co-owners one person severing joint tenancy
can cause their ownership of the property to fall under tenants
in common, but the remaining owners to still own their
percentage as joint tenants.
The rules can become complex for either joint tenants or tenants
in common, so it is important to consult with a legal
professional when making those decisions.
Disclaimer: This article is not meant to be legal advice.
Please consult a professional when questions arise regarding how
to hold your raw land.
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