Vesting

What It Means

Vesting is the legal designation that defines how ownership of real property is held. It specifies who holds Title, in what capacity, and with what rights — including survivorship, transferability, and estate treatment. In co-ownership, vesting determines the legal relationship between co-owners and shapes every aspect of how their shared investment functions.

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The two most common vesting structures for co-owners are Tenants in Common (TIC) and Joint Tenancy with Right of Survivorship (JTWROS). Each carries materially different implications for ownership shares, estate planning, and transfer rights.

Common Vesting Structures for Co-owners

Under Tenants in Common, co-owners hold distinct, independently transferable shares that can be unequal — reflecting each party's financial contribution. There is no right of survivorship; a deceased co-owner's share passes to their heirs through Probate.

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Under Joint Tenancy with Right of Survivorship, co-owners hold equal shares with automatic survivorship — when one owner dies, their share transfers directly to the surviving co-owners, bypassing probate entirely.

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Some co-owner groups hold property through an LLC, which vests title in the entity rather than in individual names. This adds a layer of liability protection but introduces additional complexity.

Why It Matters for Co-owners

Vesting is a foundational legal decision that affects tax treatment, estate outcomes, refinancing eligibility, and what happens when a co-owner exits or dies. Changing vesting after closing typically requires a new Deed and may trigger a Due on Sale Clause review by the lender.

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Co-owners should choose their vesting structure deliberately, in coordination with their Co-ownership Agreement, and with guidance from a qualified attorney.

Key Points

• Defines how property ownership is legally held and recorded
• Determines survivorship rights, transferability, and estate treatment
• Tenants in Common allows unequal shares; Joint Tenancy requires equal shares with survivorship
• Changing vesting after closing requires a new deed and may have lender implications
• Must align with the Co-ownership Agreement's terms on ownership, exit, and succession