Purchasing a home in Utah can be difficult, particularly if you just have one source of income. But that does not imply you should not consider other options for becoming a property owner.
Buying investment property in Utah with a co-owner makes sense for a variety of reasons. Marriage is the most commonly cited reason for joint or co-ownership in residential property, but this is far from the only one.
These co-ownership relationships are also typical among family members, friends, and real estate investors who have chosen to own investment property in Salt Lake City, Utah, jointly.
When a home is co-owned, one or more people share ownership of the property. Depending on what is spelled out in the ownership agreement, each co-owner is entitled to a certain share of the property.
This post will discuss the most common forms of ownership in Utah and their effects on Salt Lake City property owners in particular.
Note: This is not legal advice; therefore, we advise you to speak with a legal or tax professional before choosing any ownership form for your investment or rental property.
What Is A Co-Ownership Agreement?
A co-ownership agreement is a formal contract between two or more individuals who share ownership of a piece of property or asset. It outlines all the terms and conditions that will determine how ownership will be shared, including what will happen in the event that one owner passes away.
A co-ownership agreement may also specify how any proceeds from the sale or rental of a share of the property are to be handled. This contract is necessary if you wish to protect your investment in case something goes wrong.
The agreement can address a variety of issues when co-owning a property in Utah, such as what happens if one person wishes to sell their share, how profits and losses are divided, how a rental property will be managed, or whether it's possible to transfer any shares in the future.
What are the forms of investment property co-ownership in Utah?
An owner of real estate in Utah has many distinct forms to hold title to the property. Each type of co-ownership has a unique set of rules that apply to it. In Utah, the most common options include tenancy in common, joint tenancy, and tenancy by the entirety. Let's discuss each of them below:
Tenancy in Common
Tenancy in common is a form of co-ownership where each tenant owns their respective shares of the property separately from the other tenants.
For example, two people might jointly own a home, with one holding 45% and the other 55%, respectively. Each person is free to make their own arrangements for the sale of their share of the ownership or the person to whom their ownership will be transferred upon death (not necessarily the other owners).
If a person in a tenancy in common relationship were to have a lien imposed on the property to collect on outstanding debt, the other parties who own independent interests in the property would not be impacted by the lien.
In Utah, tenancy in common is typically the assumed form of co-ownership except if the parties are married. This makes sure that following the passing of one of the part-owners, the ownership share does not automatically transfer to the surviving stakeholders.
The term "joint tenancy" refers to a form of co-ownership in which two or more individuals jointly own the title to a piece of real estate and share equal rights to its use, access, and benefit.
The only need for the joint tenants is that they share the property title; they do not need to be related or connected in any other manner. In Utah, a joint tenancy allows anybody to co-own property.
Joint tenants have equal ownership rights over the shared property; hence, neither party is allowed to sell it without the consent of the other joint tenants. Joint tenancy also means that all parties would be impacted if one of them had a lien placed on the property.
Joint tenancy with survivorship right is a typical estate planning method in Utah that keeps property ownership within a family while trying to avoid probate. And according to Utah law, property interests can pass through joint tenancy with the right of survivorship and without going through probate.
Tenancy by the Entirety
In Utah, spouses who are legally married can co-own real estate under the legal agreement known as tenancy by the entirety. This "shared" ownership is based on the idea that a married couple is regarded as a single legal entity. In order to make it clear that the property is owned in tenancy by the entirety, two married people will specifically decide to include both names on the deed.
If one of the couples passes away, the surviving spouse automatically inherits the entire property without the requirement for a will or any sort of formal proceeding to establish who is the rightful owner. Additionally, the transfer would avoid probate.
Even though the title is held in tenancy by the entirety, neither spouse is allowed to sell the home without the consent of the other.
Can I Force the Sale of a Jointly Owned Property?
If all the owners agree, they can sell the whole property to a buyer. Even so, you can sell your share of the property without a court order or the court's approval, even if the other joint owner wants to keep the property, whereas you do not.
Professional Property Management Service in Salt Lake City, Utah.
While we still advise seeking legal assistance, Wolfnest's real estate experts can also be a resource partner, with years of experience navigating Utah property management and investment strategies.
Our team is ready to guide you toward wise real estate investment decisions and offer superior property management services for your Salt Lake City investment properties.
When you're ready to engage the service of a professional property management company to take care of your Utah investment property, get in touch with the experts at Wolfnest or call us at 801.523.4230.