Real Property

Real property Land, all buildings, structures, improvements, or other fixtures on it belonging or pertaining to the land, including mobile or manufactured homes attached to a permanent foundation on land owned by the client, all mines, minerals, fossils, and trees on or under it, and life estate and remainder interests. is an asset and must be counted toward a client’s asset limit if available and not excluded. This section explains the ways clients can own real property. For information on how to value and count real property interests, see Homestead Real Property and Non-Homestead Real Property. For more information on how to determine if real property is available, see Availability of Assets and Jointly-Owned Assets.   

Sole Ownership in Real Property.

Shared Ownership in Real Property.

Tenancy-in-Common.

Joint Tenancy.

Tenancy by the Entirety.

Ownership of Homestead Property in Minnesota.

Limits on Ownership.

Verification and Availability of Real Property Ownership Interests.

Related Topics.

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Sole Ownership in Real Property

Sole ownership of real property means that only one person or entity (the sole owner) may sell, transfer or otherwise dispose of the property.  

Note:  Sole ownership may be limited by conditions imposed by other interests. See Limits on Ownership.  

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Shared Ownership in Real Property

Shared ownership in real property means that two or more people or entities own the property at the same time. There are three types of shared ownership:  tenancy-in-common, joint tenancy, and tenancy by the entirety.    

Note:  Joint ownership may be limited by conditions imposed by other interests. See Limits on Ownership.

1. Tenancy-In-Common

Tenancy-in-common is a form of property ownership where:

n  Owners may or may not have the same interest in the property. The ownership interest may be divided equally or owners may have unequal ownership interests. For example, two tenants-in-common may each own one-half of the property or one owner may own more than the other.

n  Owners may sell, transfer or otherwise dispose of their share of the property without the permission of the other owner(s).

n  Owners do not have survivorship rights. This means that when one tenant-in-common dies, the other tenants-in-common do not automatically gain rights to the deceased owner’s interest in the property.  

Example:  

Adam, Bruce, and Carol own a cabin as tenants-in-common. Adam and Bruce each own a one-fourth interest in the property, while Carol owns the remaining one-half interest.

Carol sells her one-half interest to Don and he becomes a tenant-in-common with Adam and Bruce. Don now owns a one-half interest and Adam and Bruce each continue to own one-fourth interests.

Six-months later Don dies and his one-half share of the tenancy-in-common passes to his four children in equal shares. Each of Don’s sons now own a one-eighth interest (one-half interest divided by four) as tenants-in-common with Adam and Bruce. Adam and Bruce each continue to own a one-fourth interest in the property.

2. Joint Tenancy

Joint tenancy is a form of property ownership where:

n  Owners have the same interest in the property. Each owner owns all of the property and may possess all of the property.  

n  Owners generally may not sell, transfer or otherwise dispose of their share of the property without the permission of all other owners.

n  Owners have survivorship rights. If one joint-owner dies, that owner’s interest in the property passes to the other joint owners. For example if one of two joint owners dies, the survivor becomes the sole owner of the property. If one of three or more joint owners dies, the survivors become joint tenants of the deceased owner’s interest in the property.

Determine the value of a client’s joint tenancy interest in real property by dividing the equity value by the number of owners. For example, count $25,000 toward the asset limit of a client with an asset test who owns property that has $100,000 equity and there are three other joint owners.

Example:  

Adam, Bruce, Carol and Doug own a duplex as joint tenants. They each have a one-fourth joint interest in the whole property. When Doug dies, Adam, Bruce and Carol each obtain equal shares of Doug’s interest in the property. As a result, Adam, Bruce and Carol now each own a one-third interest in the property.

3. Tenancy by the Entirety (Married Couples Only)

Tenancy by the entirety is a form of property ownership where:

n  Owners must be members of a married couple. The wife and husband own the entire property as a unit.

n  A spouse cannot sell, transfer or otherwise dispose of the property without the consent of the other spouse.

n  Owners have survivorship rights. If one spouse dies, the other spouse becomes the sole owner of the property.

This type of real property ownership does not exist in Minnesota, but may apply to property held in another state. This form of ownership protects the property from debts contracted outside the marriage. Creditors of the debtor spouse may not collect against the property unless the debtor spouse becomes the sole owner.    

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Ownership of Homestead Property in Minnesota

In Minnesota, a spouse cannot sell, transfer or otherwise dispose of homestead property without the consent of the other spouse. This is true regardless of whether the spouses own the homestead as tenants-in-common, as joint tenants, or if the homestead is held solely in the name of only one spouse.

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Limits on Ownership

Real property owners (both sole and shared owners) may have absolute and unqualified title to real property. This means they can sell, transfer, possess, use or otherwise dispose of their interest in their property during their lifetime without limit or condition. This is called ”fee simple ownership.”  Real property owners may have limits on their rights to sell, transfer, possess, use or otherwise dispose of their property. This is ”less than fee simple” ownership.  

Three types of less than fee simple ownership are:

l  Life Estate.

l  Remainder Interest.

l  Estate for Years  (Leasehold Estate or estate for term).

An estate for years is an interest in real property held under a rental agreement by which the owner gives another the right to occupy or use the real property for a period. In this type of lease, there is a defined specific beginning date and ending date of the tenant’s right to possess the leased property. The lease cannot be terminated before expiration unless both parties agree. The rights and obligations of the owner (or landlord) and the tenant are spelled out in the lease.  

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Verification and Availability of Real Property Ownership Interests

Verify real property as required in Verification of Assets.  

Assume that real property is available unless the client proves that it is not. Assume that shared owners have equal ownership of the real property unless the client proves a greater or lesser ownership interest. Documents that clients may use to verify ownership interests and availability include, but are not limited to:

l  Deeds.

l  Assessment notices.

l  Current tax bills.

l  Current mortgage statements.

l  Report of title searches.

l  Wills, court records or documents which show rights of an heir to property after death of a former owner.

See Availability of Assets and Jointly-Owned Assets for more information on how to determine if real property is available.

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Related Topics

Homestead Real Property.

Non-Homestead Real Property.

Promissory Notes, Contracts for Deed and Other Property Agreements.

Long-Term Care (LTC) Home Equity Limit.

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