What follows is a brief summary of the various ways two or more persons can hold title to Oregon real estate. Note, the following information is not to be construed as legal advice or a solicitation for legal representation. It is informational only and not intended to replace legal or estate planning advice from your attorney, CPA or tax consultant.
Tenants by the Entirety (i.e. Husband and Wife) – A conveyance to a married couple automatically creates a “tenancy by the entirety” unless the deed “clearly and expressly declares otherwise”. See, ORS 93.180(1)(b). This means that a conveyance to John Smith and Jane Smith (with or without identifying them as “husband and wife” or “as tenants by the entirety”) will create a tenancy by the entirety, which carries with it the right of survivorship (discussed at Section 3, below), so long as they were legally married at the time of the conveyance. Good drafting, however, dictates that if the parties are married, the deed be to the grantees “as husband and wife”.
Note that since we are not a community property state, in Oregon, married persons can hold title in their individual names, free and clear of any claim by their spouse.[1] However, upon divorce, each spouses’ separate property becomes fair game when the judge issues a decree as to who will own what, going forward. In other words, just because title to a property is held in the husband’s name, does not mean all of the equity will be awarded to him, free and clear of the wife’s claims.
Tenants in Common – ORS 93.180(1)(a) provides that a conveyance of land to two or more unmarried persons creates a tenancy in common. Ownership by “tenants in common” means that as each co-owner dies, their interest goes into the decedent’s own estate for distribution to his or her heirs, or the person(s) designated in the will. This is different from ownership which carries a right of “survivorship”, where the decedent’s interest automatically goes to the surviving co-owners, and not into the decedent’s estate.
Unless the deed of conveyance “clearly and expressly declares” that the grantees are to hold title with the right of survivorship, it will be presumed they hold title as tenants in common. So, for example, a conveyance to “John Smith and Robert Jones”, without more, will create a tenancy in common.
It is not uncommon, say among two families that are going into joint ownership of a vacation home, to form what is known as a Tenancy in Common Agreement or “TIC Agreement”. The document identifies the owners, their percentage interests, various financial responsibilities, and addresses what will occur when some unexpected event occurs, such as death, divorce, or debt. In such cases, or when one member simply wants out, their interest is valued, with the remaining owners having the first right of refusal, based upon the terms of the TIC Agreement.
Survivorship Estates – A “right of survivorship” means that as between two co-owners, upon the death of one of them, the survivor acquires the decedent’s share and therefor owns 100% of the property, as the sole owner. If there are multiple co-owners, all holding a right of survivorship, as each owner dies, the remaining survivor(s) jointly acquire(s) the share of the decedent. Ultimately, the last survivor will end up owning 100% of the co-owners’ interest that predeceased him or her.
However, in order to convey title to co-owners with a right of survivorship, it must be expressly stated in the deed – otherwise, without more, it will be presumed to be a tenancy in common (which carries no right of survivorship). So, for example, if a grantor intended to create a right of survivorship to an unmarried couple, the deed should read “…to John and Mary Doe, with the right of survivorship and not as tenants in common”. This language meets the requirement in ORS 93.180(1)(a) of “clearly and expressly” disavowing the tenancy in common, and creating co-ownership with a right of survivorship.
Domestic Partnership – ORS 106.310 provides that a “Domestic Partnership” is a civil contract entered into between two persons of the same sex who are at least 18 years of age, and one of whom is an Oregon resident. Pursuant to ORS 106.340, all rights and privileges granted to individuals because they are (or were) married, are also granted to persons who have legally satisfied the registration provisions [2] of Oregon’s Domestic Partnership laws. This means that domestic partners may hold title to real property subject to the same laws described in all of the other forms of ownership available to married persons of the opposite sex. For purposes of this article, all references to “married persons” includes domestic partners.
Entity Ownership – Some people choose to hold title to real estate in the name of a legal entity, other than in their own individual name. Certain entities, such as corporations or limited liability companies, have an indefinite duration, i.e. they generally last as long as they are legally recognized by the state of their creation. Other entities, such as partnerships and joint ventures, if they are composed of individuals, last only so long as the life of the last participant, or until the entity is dissolved, whichever first occurs.
When the entity holding title to real estate is dissolved, voluntarily or involuntarily, the determination of who acquires ownership of the land can become messy and confusing. For that reason, there should always be one or more persons responsible to assure that the entity holding title maintains proper records, and that it remain in good standing with the state of Oregon. ~Phil
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[1] See, ORS 112.025 and 112.045.
