As a homebuyer, you have plenty to consider when purchasing real estate in Michigan, including location, price, and financing. However, one of the most important decisions often happens behind the scenes: how you’ll hold title to the property.
Also known as tenancy, the way ownership is structured can have a big impact on your rights as an owner — and has lasting implications for how the property is managed, transferred, or inherited.
To help you avoid surprises down the road, let’s look at the most common forms of tenancy in Michigan and when each one makes the most sense.
Why the Way You Hold Title Matters
It may just seem like fine print, but how you hold title isn’t merely a legal formality. The ownership structure outlined on the deed establishes each owner’s legal rights and can have long-term consequences.
For example, tenancy determines each owner’s interest in the property and what happens if one owner decides to sell their share or passes away. The right ownership structure is also important for married couples, unmarried partners, business owners, real estate investors, and family members purchasing property together.
Choosing how to hold title in each situation begins with carefully considering goals and intentions. If the intended ownership isn’t clearly stated on the deed, mistakes can happen and lead to delays, disputes, or costly legal issues.
What Are the Common Ways to Hold Title?
Since there isn’t a one-size-fits-all approach to property ownership, the right way to hold title depends on who is purchasing the property, how it will be used, and what the owners intend for the future.
Here are the most common ways to hold title in Michigan, along with how each type of ownership works and when it may be the best fit:
- Tenants in Common – The most common form of co-ownership in Michigan, this serves as the default form of ownership when multiple people acquire property together without creating another type of tenancy. Under this arrangement, each owner holds a separate ownership interest in the property. Those interests can be equal or unequal. For example, one owner may hold a 70% interest while another owns 30%.Each owner has the right to sell, transfer, or leave their ownership interest to someone else without affecting the other owners’ shares. However, a tenancy in common does not include a right of survivorship. If one owner passes away, that person’s interest becomes part of their estate and is transferred according to their will or Michigan law. The interest may need to pass through probate before ownership is transferred.Best for: Friends, family members, unmarried couples, or business partners who want flexibility in ownership and the ability to transfer their individual interest independently.
- Joint Tenancy – This allows two or more people to own property together, with each owner typically holding an equal ownership interest. Joint tenancy features the potential for a right of survivorship, so that when one owner dies, their interest automatically passes to the surviving owner(s) instead of becoming part of the deceased owner’s estate. In Michigan, however, the deed must contain specific language clearly expressing the owners’ intent to create it that way.When properly established, joint tenancy with rights of survivorship can simplify the transfer of ownership after an owner’s death by avoiding probate for the deceased owner’s interest. Each joint tenant generally has the ability to transfer or sell their interest individually during their lifetime.Best for: Co-owners who want the property to pass automatically to the surviving owner, such as siblings, close family members, or unmarried partners.
- Joint Tenants with Full Rights of Survivorship – This is a form of co-ownership designed to provide stronger survivorship protections. Like other joint tenancy arrangements, each owner typically holds an equal ownership interest, and when one owner dies, that person’s interest automatically passes to the surviving owner(s).The arrangement differs in that one owner cannot eliminate the survivorship feature by transferring their interest to someone else. Instead, the survivorship rights remain in place unless all owners take action or other legal circumstances apply. This added protection helps ensure that the property is ultimately transferred according to the owners’ original intentions.Best for: Co-owners who want greater assurance that the property will automatically pass to the surviving owner(s) and stronger protection for survivorship rights.
- Tenancy by the Entireties – This is a unique form of property ownership available only to married couples in Michigan. It recognizes a married couple as a single legal unit for ownership purposes. One of its primary benefits is the right of survivorship. If one spouse passes away, the surviving spouse automatically becomes the sole owner of the property without the deceased spouse’s interest passing through probate.
This tenancy type also requires both spouses to act together when making decisions about the property. Neither spouse can sell, transfer, or place a mortgage or other lien on the property without the other’s consent. It may also provide protection from creditors in certain situations. If only one spouse owes a debt, creditors may not be able to force the sale of property to satisfy that individual debt.
Best for: Married couples purchasing property together who want automatic survivorship rights, shared control over the property, and the potential for added creditor protection.
Click here for a brief overview of the different tenancy types in Michigan, as well as a list of other ways title may be held.
How to Choose the Right Option
As mentioned above, there is no singular answer when choosing the best tenancy type for your unique situation. The right choice depends on your relationship status, estate planning goals, investment purpose, creditor concerns, and future plans. Your title company can help identify how title is being held, while legal advice should come from an experienced attorney.
Some common mistakes to avoid when determining how to hold title include:
- Assuming all co-owners automatically have survivorship rights
- Not updating title after marriage, divorce, death, or estate planning changes
- Using vague wording on deeds
- Buying with family or friends without understanding ownership percentages
- Not consulting an attorney when estate planning or creditor protection is involved
Vanguard Can Help with the Tenancy Process
The way you hold title can have consequences long after you receive possession to your new property, so it’s important to understand your options before closing. Fortunately, Vanguard Title is well-versed in the many ways to structure ownership and can help buyers, sellers, agents, and lenders navigate the title process with confidence.
Our team of seasoned title professionals can answer your tenancy questions and work with your attorney or other advisors to help make sure the way you hold title reflects your goals and intentions.