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Real Estate

What are the differences between some common forms of property ownership?

What is the purpose of “recording” a deed?

What tax advantage do I get by owning real property?

What is a quitclaim deed?

Since my spouse passed away, I want to re-title my house so I own it jointly with my adult children. Is this a good idea?

What is the “Closing”?





Q: What are the differences between some common forms of property ownership?

There are a variety of ways that one can hold title to property:

Sole Ownership: owned entirely by one person. Words in the deed such as "Bill, a single man" establish title as sole ownership.

Tenants in Common: a form of co-ownership where property is owned by two or more persons at the same time.  The proportionate interests and right to possess the property between the tenants in common need not be equal.  Upon death, the decedent's interest passes to his or her heirs named in the will, or absent a will to his or her heirs by intestate succession, who then become new tenants in common with the other tenants in common. Words in the deed such as "Bill, John and Mary as tenants in common" establish tenancy in common.   The interest of any tenant in common is subject to the claims or his or her creditors.

Joint Tenancy: a form of co-ownership where property is owned by two or more persons at the same time in equal shares. Each joint owner has an undivided right to possess the whole property and a proportionate right of equal ownership interest. When one joint tenant dies, his/her interest automatically passes on to the surviving joint tenant(s).  Words in the deed such as "Bill and Mary, as joint tenants with right of survivorship" establish title in joint tenancy.  The joint tenancy can be “severed” and converted into a tenancy in common by any joint tenant acting individually, e.g., by transferring his or her interest.   Also, the interest of any joint tenant is subject to the claims of his creditors.   If a creditor obtains a judgment and executes on the joint tenant’s interest, the joint tenancy is converted to a tenancy in common as to that co-owner.

Tenancy by the Entirety: a special form of joint tenancy when the joint tenants are husband and wife -- with each owning one-half.  Neither spouse can sell the property without the consent of the other, and the property is not subject to the claims of either spouse’s individual creditors.    A “joint creditor,” that is, a creditor having an identical claim against the husband and the wife, can reach property held as tenants by the entirety.   Words in the deed such as "Bill and Mary, husband and wife as tenancy in the entirety" establish title in tenancy by the entireties.


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Q: What is the purpose of “recording” a deed?

When you purchase real property, you receive a written document called "the deed" which transfers the ownership of the property from the buyer to you as the purchaser.  The transfer of interest in real property is not complete until the deed is delivered to you.    The deed should be recorded immediately in the land records of the county where the property is located.   If the original deed is lost or destroyed, the recorded deed still protects your interest, and you can obtain a copy from the Clerk of Court.   Under Maryland law, no deed may pass or take effect unless the deed is executed and recorded.  By recording the deed, you give notice to all future potential buyers of that property that you now have an ownership interest in that particular piece of real property.  Recording also tracks the chronological chain of ownership from a series of buyers and sellers.  Before you purchase real property, a search is conducted at the county clerk’s recording office to confirm that the seller (as well as all previous sellers) has legal title to the property in question.   


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Q: What tax advantage do I get by owning real property?

Mortgage interest deduction: The major advantage to owning real property comes from the deductibility of the interest of a home mortgage or a home equity loan. In order to qualify for an income tax deduction, the loan must be for your home or a vacation home that is not rented to others. The deduction must be taken as an itemized deduction in Schedule A of your federal tax return.

Property tax deduction: real estate taxes paid to any state or local governments are also deductible on your federal return. Generally, the taxes must be based on the assessed value of the real property and must be charged uniformly against all property under the jurisdiction of the taxing authority.

Capital gains exemption: Once you sell your residence, you may exclude up to $250,000 ($500,000 for married couples) from any realized capital gains. In order to qualify, you must meet certain requirements: among other things, you must have lived in that home for at least two of the five years prior to the sale, and not have excluded gain from the sale of another home two years prior to the sale.


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Q: What is a quitclaim deed?

A quitclaim deed transfers or "releases" to the person acquiring the property whatever interest, if any, the grantor has in that property.  A quitclaim deed carries with it no express or implied covenants or guarantees. Therefore, if the grantor has no interest in the property, a quitclaim deed conveys nothing, and you have no recourse against the grantor.


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Q: Since my spouse passed away, I want to re-title my house so I own it jointly with my adult children. Is this a good idea?

Depending on your financial circumstances, and the financial circumstances of your children, this may or may not be advisable.   You should always review your situation with knowledgeable legal counsel.  

If an interest in your home is transferred to a child as tenant in common or as joint tenant, your home will be subject to the claims of his or her creditors.  In the event a judgment is entered against your child, the judgment creditor can levy upon his or her interest and force a sale of your home.   To guard against the possible loss of your residence, you can reserve a life estate or “lifetime rights,” in which event the child will have a possessory interest only after your death.  Although creditors can still reach the child’s remainder interest in the property, your lifetime rights cannot be disturbed.

Before making any transfer of assets, consideration should be given to the Medicaid consequences.   You can be penalized if you transfer assets prior to making application for public assistance.


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Q: What is the “Closing”?

The closing is a final meeting of all the parties involved in the real estate transaction.   Attorneys for buyer, seller and bank convene with sellers and buyers to sign and officially transfer title to the buyers. A representative of the title insurance company will also be present to facilitate the transfer of title. The title company is also responsible for recording the new deed. 
 
Before arriving at the closing, the buyer should visit the property to assure that everything is in working order. That means turning on the heat and air conditioning and checking for leaks and other problems. After the closing any problem is the buyer’s responsibility. The buyer should also have all the necessary paperwork and certified checks for the seller and for various closing costs. Otherwise, if the mortgage, title, homeowner’s insurance and other documents required by law are not completed and brought to the closing table, the closing may be delayed.


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Robins & Robins, P.A. based in Salisbury, MD serves the Delmarva Peninsula and Maryland ‘s Eastern Shore including Wicomico, Somerset, Worcester, Dorchester and Talbot Counties.



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| Phone: 410-749-3791


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