Real estate ownership takes many forms in New Jersey.
Rights in real property change based on the number of owners and their percentage share, martial relationships, whether subject to inheritance or automatic transfer, death of a beneficiary, use restrictions, right of re-entry, and termination upon the occurrence of a pre-defined event.
Deeds in New Jersey convey the following types of ownership interest:
- Fee Simple Absolute
- Fee Simple Defeasible
- Tenancy in Common
- Joint Tenancy with the Right of Survivorship
- Tenancy by the Entirety
- Life Estate
This section discusses how each ownership interest functions and the language of creation.
Fee Simple Absolute
Fee simple absolute is the greatest possible interest in real estate. The owner has the exclusive right to use, possess, dispose of, and even damage the property.
No reversionary interests exist to a third party, and property descends via the probate process upon the death of the fee simple owner. There are no restrictions on fee simple absolute owners. Given the extensive rights, only one fee simple absolute owner may exist at a time.
Where a grantor has fee simple absolute ownership, deeds in New Jersey are presumed to transfer the full interest to the grantee unless a contrary intention is expressed in the deed. N.J.S.A. 46:3-13. No special wording is needed to establish a fee simple absolute estate.
Every deed conveying lands shall, unless an exception be made therein, be construed to include all the estate, right, title, interest, use, possession, property, claim and demand whatsoever, both in law and equity, of the grantor, including the fee simple if he had such an estate, of, in and to the premises conveyed, with the appurtenances, and the word “heirs” shall not be necessary in any deed to effect the conveyance of the fee simple.
Fee Simple Defeasible
Fee simple defeasible ownership has the characteristics of fee simple absolute, except that ownership terminates upon a specific condition or qualification. If the condition never occurs, the defeasible estate may last indefinitely and be inherited by heirs.
Common defeasible interests are fee simple determinable, fee simple subject to condition subsequent, and fee simple subject to an executory limitation.
Fee Simple Determinable.
Fee simple determinable is a form of ownership that expires upon the occurrence of a specific condition, and ownership interest automatically reverts to the grantor, successor, or other designated third-person.
The individual with the right to receive ownership upon the occurrence of the specific condition has the “possibility of reverter.” This reversionary interest may be sold or transferred by the individual.
Phrases in a deed such as “while”, “during”, “so long as” create fee simple determinable estates. Lehigh Valley R.R. Co. v. Chapman, 35 N.J. 177 (N.J. 1961).
Fee Simple Subject to a Condition Subsequent.
Fee simple subject to a condition subsequent is a fee simple estate which, upon the occurrence of a specific condition, creates a right to terminate the estate in favor of the original grantor or third party.
This right to terminate is called the right of re-entry or power of termination.
Anexampleof afee simple subject to condition subsequentwould be that the owner transfers his residential property, with the condition that he has the right to have ownership returned to him if the property is used commercially.
Upon the occurrence of the specific condition, termination of the current ownership is not automatic. Ownership continues as prior to the occurrence of the specific condition, until the power of termination is exercised.
The words “upon condition that” or “provided that”, accompanied by a description of the condition triggering the right of re-entry, in a deed create a fee simple subject to a condition subsequent estate. Hagaman v. Bd. of Ed. of Tp. of Woodbridge, 117 N.J. Super. 446 (N.J. Super. 1971).
Fee Simple Subject to an Executory Limitation.
A fee simple subject to an executory limitation is an interest in real estate that, upon the occurrence of a specific condition, automatically transfers to a third person.
The third-person’s future interest is called an “executory” interest.
See Claremont Health Sys., Inc. v. Point Pleasant Borough, 16 N.J. Tax 604 (1997) (“The fee simple subject to an executory limitation, on the other hand, is defeasible in favor of a person expressly designated in the creating instrument other than the person who created the defeasible fee simple or his successors in interest.”)
Tenancy In Common
A tenancy in common is the most frequent form of co-ownership. Real estate transfers in New Jersey to two or more people create a tenancy in common unless the deed states otherwise (with the exception of husband and wife). N.J.S.A. 46:3-17.
Property rights of co-tenants are equal (same percentage of ownership) and undivided (shared interest in each part of the “bundle of rights”) unless altered by the deed.
Tenants in common may freely transfer their interest to a third-party without consent of other co-tenants. Upon death, the rights of a tenant in common are inherited via the intestate process – ownership does not transfer to the surviving co-tenant.
Upon the sale of commonly owned property, owners that paid more than their pro-rata share of operating expenses are entitled to a credit from the other co-owners. Esteves v. Esteves, 341 N.J. Super. 197 (App. Div. 2001).
Deeds may create a tenancy in common using the following language: “Grantor grants and conveys ownership of the property described below to Grantees, as tenants in common, along with all of its rights and appurtenances.”
Joint Tenancy
A joint tenancy is a form of co-ownership marked by the “right of survivorship”. Ownership rights of a deceased joint tenant automatically transfer to the surviving joint tenants.
Joint tenants may sell or transfer their interest, severing the joint tenancy and ending the right of survivorship. The person to whom the joint tenants interest was conveyed becomes a tenant in common with the remaining co-owner. Gauger v. Gauger, 73 N.J. 538 (N.J. 1977).
Since New Jersey favors tenants in common, parties must express their intention in the deed to create a joint tenancy. N.J.S.A. 46:3-17.
Deeds may create a joint-tenancy using the following language: “Grantor grants and conveys ownership of the property described below to Grantees, as joint tenants with right of survivorship and not as tenants in common, along with all of its rights and appurtenances.”
Tenancy By The Entirety
A tenancy by the entirety is a form of joint property ownership available only to spouses. The purpose of this ownership is to protect assets during a marriage, and to provide security for one spouse on the death of the other.
Transfer of real estate to a husband and wife create a tenancy by the entirety unless the deed expresses or has a “tenor” manifestly indicating otherwise. N.J.S.A. 46:3-17.3.
Features of tenancy by the entirety include:
- Right of Survivorship – The surviving spouse becomes full owner of the property upon the death of the other spouse. N.J.S.A. 3B:9-1.
- No “Partition” Actions Allowed – Neither spouse may force the involuntary partition of the subject property during divorce. Jimenez v. Jimenez, 454 N.J. Super. 432 (N.J. Super. 2018).
- Written Consent Required to Impact Interest – Spouses may not impact their interest in a tenancy entirety during marriage or separation without the written consent of both spouses. N.J.S.A. 46:3-17.4.
- Tenancy in Common Upon Divorce – Tenancies by the entirety convert to a tenancy in common upon divorce with each spouse maintaining an equal one-half interest. Freda v. Commercial Trust Co., 118 N.J. 36 (N.J. 1990). Spouses may file a “lis pendens” to protect their interest during a divorce, and obtain a court order prohibiting the other from alienating or encumbering marital assets. Vander Weert v. Vander Weert, 304 N.J. Super. 339 (N.J. Super. 1997).
Tenancy by the entirety can be created in three ways under N.J.S.A. 46:3-17.2:
- The written instrument granting ownership to husband and wife designated both of their names as husband and wife;
- A husband and wife lease property with an option to purchase designating both of their names as husband and wife;
- An owner spouse conveys or transfers an interest in real property or personal property to the non-owner spouse and the owner spouse jointly under written instrument designating both of their names as husband and wife.
Where a deed grants ownership to three persons, two of whom are husband and wife, the husband and wife take one half, and the other person takes the other half. Petrone v. Petrone, No. A-5974-08T1, at *21-22 (N.J. Super. Oct. 28, 2013).
Life Estates
A life estate is a form of interest in real property that conveys the right to possess the property to a “life tenant” until the death of a named person. Upon death of the named person, the property automatically transfers to a designated remaindermen.
The “named person” whose death triggers the transfer can be the life tenant, grantor, or any third-person.
As an example, an owner may grant a life estate to a family member, such as a sibling or child, to reside in the home until their death. When the grantee passes away, ownership of the property transfers to the remaindermen.
Absent intent to the contrary, grantees of the life estate retain exclusive right of possession of the property with all the rights and obligations associated with ownership, including receiving income and paying costs such as taxes. See Dolan v. Muzyka, No. A-4521-11T2 (N.J. Super. Apr. 18, 2013).
Deeds may use the phrase “during the natural life of” to identify the person whose death triggers the life estate to transfer to the remaindermen, and the phrase “the remainder over at death to” to identify the remaindermen.
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Forms of Real Estate Ownership in New Jersey? ›
- Fee Simple Absolute.
- Fee Simple Defeasible.
- Tenancy in Common.
- Joint Tenancy with the Right of Survivorship.
- Tenancy by the Entirety.
- Life Estate.
The different types of real estate title are joint tenancy, tenancy in common, tenants by entirety, sole ownership, and community property. Other, less common types of property ownership are corporate ownership, partnership ownership, and trust ownership.
What is the most common form of deed utilized in NJ? ›A bargain and sale deed with Covenants as to Grantor's Acts is the most common deed in New Jersey. A bargain and sale deed conveys the entirety of the grantor's interest at the time of transfer.
What type of deed is used in New Jersey? ›New Jersey recognizes multiple kinds of deeds: bargain and sale, quit claim, sheriff's deed, deed in lieu of foreclosure, special warranty, and general warranty deeds. The New Jersey Recording Act requires that deeds must be recorded to be fully enforceable against future claims.
Does NJ have tenants by the entirety? ›The nature of a tenancy by the entirety is well established under New Jersey law. It is an undivided legal ownership interest in the marital home for the joint lives of each spouse while married subject to the right of survivorship upon the death of the first spouse.
What is the most common form of property ownership? ›The most common form of real property ownership is fee simple or fee simple absolute. Fee simple means the right to exclusivepossession of a particular piece of land for an indefinite time, as well as the right to dispose of the land as the owner pleases.
What are the 3 types of property? ›In economics and political economy, there are three broad forms of property: private property, public property, and collective property (also called cooperative property).
What is a deed of trust in NJ? ›by Practical Law Trusts and Estates. A deed used to convey New Jersey real property to a revocable trust. This Standard Document contains integrated notes and drafting tips.
How do you transfer ownership of a house in NJ? ›In New Jersey, the deed must be in English, identify the seller/buyer (grantor/grantee), name the person that prepared the deed, state the consideration (amount paid) for the transfer, contain a legal description of the property (a survey), include the signature of the grantor and be signed before a notary.
What is the best type of deed to get? ›A Warranty Deed is the best of the best. It protects you from all future and past issues with property title and any outstanding debts or liens.
Does an attorney have to prepare a deed in New Jersey? ›
A No. In New Jersey, the preparation of legal documents such as a deed is considered the practice of law which may only be undertaken by an Attorney at Law of the State of New Jersey. The only exception to that rule is that an individual representing him/herself may prepare his/her own documents.
What is a grant deed in NJ? ›A New Jersey Grant Deed is a legal document that can be used to convey real property from one person or entity to another. The New Jersey Statutes contain a short form deed that New Jersey residents can use.
What is a quitclaim deed in NJ? ›A quitclaim deed in New Jersey allows a property owners (grantors) to release their rights in the property to a buyer (grantee). Generally, quitclaim deeds are used to pass property to a relative, to divest an interest in a property due to a divorce, or when selling a property to another individual.
Does NJ have a transfer on death deed? ›New Jersey does not allow real estate to be transferred with transfer-on-death deeds.
Does New Jersey have right of survivorship? ›If there are two or more surviving parties, their respective ownerships during lifetime shall be in proportion to their previous ownership interests under section 4 augmented by an equal share for each survivor of any interest the decedent may have owned in the account immediately before his death; and the right of ...
Does spouse have to be on title in New Jersey? ›When property is owned by an individual, always require their spouse to join the deed, mortgage, or lease. married to satisfy this requirement. However, if anything in your search shows that they might be married, you must confirm it. signing the Note.
What are the six distinct forms of ownership? ›In California, property is generally owned in one of 6 distinct forms of ownership: Severalty; Tenancy in Common; Joint Tenancy; Tenancy in Partnership; Community Property; and Community Property with the Right of Survivorship.
What are the 3 main types of business ownership in real estate? ›a partnership (normal partnership) a limited partnership. an incorporated limited partnership.
What is the simplest form of property ownership? ›For single individuals. Sole ownership: Sole ownership is one of the simplest types of ownership in real estate. Like the name implies, in sole ownership an individual is the only owner of a property, and they can sell, lease or give the property to another party without needing anyone's permission.
What are the 4 types of real estate? ›There are five main categories of real estate which include residential, commercial, industrial, raw land, and special use.
What are the 4 types of properties? ›
- . Commutative property :
- 2 . Associative property :
- 3 . Distributive property :
- 4 . Identity property :
Tangible personal property includes physical objects such as vehicles, furniture and household goods, while intangible personal property includes things like stocks and bonds, as well as intellectual property such as patents and copyrights.
Is it better to have a will or a trust in NJ? ›A will must become public record when it is probated. A trust is also more secure than a will because it is more difficult to contest. While a living trust does not technically shield your assets from creditors, in practice, it can help avoid them.
Who needs a trust instead of a will? ›Single People. Anyone who is single and has assets titled in their sole name should consider a revocable living trust. The two main reasons are to keep you and your assets out of a court-supervised guardianship, and to allow your beneficiaries to avoid the costs and hassles of probate.
What is the best trust to have? ›- Revocable Trusts. One of the two main types of trust is a revocable trust. ...
- Irrevocable Trusts. The other main type of trust is a irrevocable trust. ...
- Credit Shelter Trusts. ...
- Irrevocable Life Insurance Trust.
You can gift your house or any other asset to anyone, provided that person is capable of receiving the gift and takes delivery or ownership of it, said Gene McGovern, a certified financial planner with McGovern Financial Advisors in Westfield.
How do I avoid transfer tax in NJ? ›This is simply to prevent transactions that purposely avoid the NJ Realty Transfer Tax by selling property cheaply on paper (thus, paying less in fees) and compensating the seller at a later time. The director's ratio exists so that the realty transfer fee will always represent the true value of the transaction.
How do I avoid capital gains tax in NJ? ›To qualify for the capital gain exclusion, a homeowner must meet both the ownership test and use test, Maye said. “The requirement is that you used the home as your primary residence in aggregate for two out of the five years prior to the home's sale,” he said.
What type of deed is most commonly used? ›General warranty deed
Mainly for this reason, general warranty deeds are the most commonly used type of deed in real estate sales.
Which is more important: title or deed? Both the title and the deed are of equal importance because they both have a purpose in the home selling process. For instance, a title search can note only confirm who owns the property, but also lists any liens, loans, or property taxes due.
How do you prove ownership of a property? ›
To officially prove ownership of a property, you will require Official Copies of the register and title plan; these are what people commonly refer to as title deeds because they are the irrefutable proof of ownership of a property.
How many types of ownership of property are there? ›The three types of property ownership are individual ownership, joint ownership and ownership by way of nomination.
What are the four types of property rights? ›The main legal property rights are the right of possession, the right of control, the right of exclusion, the right to derive income, and the right of disposition.
What are the two types of property ownership? ›But what does jointly mean in terms of property ownership and why should you care? There are two types of property ownership; property can be held as either joint tenants or tenants in common.
How many types of house property are there? ›There are 3 categories of the house property as under-
Self-occupied house property; Let out property; Deemed to be let out property.
In California, property is generally owned in one of 6 distinct forms of ownership: Severalty; Tenancy in Common; Joint Tenancy; Tenancy in Partnership; Community Property; and Community Property with the Right of Survivorship.
What are the 3 main types of business ownership in real estate? ›a partnership (normal partnership) a limited partnership. an incorporated limited partnership.
What are the different kinds of property rights? ›Quebec civil law views all types of property either as "immovable" (land and its appurtenances, and all rights in land) or as "movable" (physically movable objects as well as claims for money and performances under contracts and obligations in general).
What are types of property rights? ›The types of rights over land as applicable in India vary in nature, such as leasehold rights, freehold rights, easement rights, development rights, and mortgage rights, among others. India is a country with diverse laws relating to real estate.
What are the different types of property in law? ›There are two main types of property law, generally referred to as "intellectual" and "real." Within these two large categories there may be a wealth of statutes and systems that deal with specific aspects of the law. A design or blueprint can be considered intellectual property.
What is the difference between deed and title? ›
A deed is the physical legal document whereas title is the name that describes a person's legal position regarding something. Deeds are official written documents, and in most states are required to be recorded in a courthouse or assessor's office.
What is difference between ownership and title? ›A deed is an official written document declaring a person's legal ownership of a property, while a title refers to the concept of ownership rights. Here's a way to remember the difference: although you can own a physical copy of a book, you can't hold a book's title in your hand.
Which is more important title or deed? ›Which is more important: title or deed? Both the title and the deed are of equal importance because they both have a purpose in the home selling process. For instance, a title search can note only confirm who owns the property, but also lists any liens, loans, or property taxes due.
How does flat ownership work? ›Who owns land in apartment? The apartment owners collectively own the land on which the apartment building stands. In a cooperative housing society, the land is owned by the society and the flat owners are shareholders of the society.
Who is the legal owner of a property? ›The legal owner of a property is the person who owns the legal title of the land, whereas the beneficial owner is the person who is entitled to the benefits of the property.
What are the two types of houses? ›- Single-family homes. Single-family homes are what you think of as your regular old house. ...
- Multifamily homes. Multifamily homes, on the other hand, are meant to house more than one family or a group of people. ...
- Apartments. ...
- Townhouses. ...
- Condos. ...
- Co-ops. ...
- Mansions and McMansions. ...
- Colonial.