Everything You Need to Know About Tenancy in Severalty

What Is Tenancy in Severalty?

Tenancy in severalty, or ownership in severalty, is a real estate term describing a property that only has one owner. You may also hear the term “sole and separate” being used to describe this type of property ownership. The term “severalty” is derived from the concept that an owner is “severed” from other owners. It means that there are no special caveats relating to other owners, and that the sole owner has the freedom to do anything with the property in question. They can choose to sell it, gift it, lease it to tenants, or transfer it heirs without having to gain permission from any other parties.

Tenancy in Severalty vs. Tenants in Common

Tenancy in severalty vs. tenants in common: these are likely two of the most polar opposite ownership structures in real estate that an individual could select.

As discussed, tenancy in severalty describes sole ownership, whether the sole owner be an individual or an entity. They do not have to confer with other owners when it comes to decisions regarding the property, as other owners do not exist.

In real estate, the term tenants in common describes an ownership structure when there are multiple owners at the same time. The deed lists each owner who holds title, along with their share of property interest. In most cases, multiple owners will hold equal title in a property. Tenants in common provides flexibility and allows owners to distribute title unequally if they so choose. Further, each owner can convey their personal interest in the property as they please. They cannot, however, make decisions regarding the property in entirety. Find out more in-depth information about this ownership structure in our “What is Tenancy in Common” guide if you’re interested in owning property with other individuals. 

Tenancy in severalty represents one option for sole ownership, while tenants in common represents one joint ownership option. There are several different types of tenancy, each with its own set of rules, advantages, and disadvantages. Find out which type is right for you by reading our Types of Tenancy guide. 

Is Tenancy in Severalty Right for You?

Is tenancy in severalty right for you? Before entering any type of real estate ownership structure, it’s critical to ask if the default structure is correct for you. For instance, maybe you’re inheriting a property from a prior sole owner. After some thought, you may realize that you want to change the structure and convert it to a joint ownership with another individual (or more.) 

It’s helpful to weigh the advantages and disadvantages of the ownership structure presented to you. In this case, it’s tenancy in severalty. Here are the unique pros and cons to consider.

Pros of Tenancy in Severalty

Sole ownership: The key benefit of tenancy in severalty is having sole ownership of the property. It does not belong in any shape or form with other parties. This means you don’t have to coordinate with other tenants, and you can avoid possible conflicts or issues associated with joint tenancy models.

Control: As a sole owner, that also means that you have the maximum level of control over your property. Because you don’t have to coordinate with joint tenants, you get to sell, lease, mortgage, or transfer ownership whenever and however you want. 

Estate planning ease: Last but not least, tenancy in severalty makes it easier to plan your estate. Because you don’t have to deal with the moving pieces of sharing property interest with other parties, it’s less confusing. You can name inheritance amounts and property portions in a straightforward manner relative to other types of real estate ownership. 

Cons of Tenancy in Severalty

No rights of survivorship: The reasons for which a person may not choose tenancy in severalty is because it does not offer any right of survivorship. If the owner passes away, the property cannot pass automatically to a surviving spouse or other heir.

Subject to probate: When a property does not have any right of survivorship, that means that it has to pass through the probate process. This is a lengthy legal process that can take months to several years to settle, and also reduces the total value of the estate. This can negatively impact your intended heirs. One possible solution is to transfer the property to a Trust to avoid probate. This effectively removes your property out of your personal estate because it is now under ownership of a Trust. Any assets held in a Trust do not have to go through the probate process and thus helps preserve them for your heirs. Trust & Will explains how to transfer real estate into a Living Trust here, in case this is an option you’d like to pursue. 

Not great for married couples: Last but not least, if you are in a partnership, you may not want to opt for the tenancy in severalty ownership structure. Because it doesn’t offer the right of survivorship for your spouse, they would not inherit it automatically if you were to pass away. However, this might be a good option if you specifically didn’t want your spouse to inherit your assets. Learn more about the right of survivorship here. 

How Tenancy in Severalty Can Affect Your Estate Plan

This guide has introduced a few ways in which tenancy in severalty can affect your estate plan. One aspect to consider is the ease of estate planning when you have sole ownership of a property. This allows you to bequeath property to your heirs without having to navigate how this right might be impacted by other owners. You’re free to do as you please. However, this ownership structure does not have the right of survivorship. This means that if you were to pass away, the property would not pass automatically to your spouse or next heir in line. Rather, it would have to go through the probate process to determine how it should be transferred. This can be worrisome if you live in a house, for instance, with your spouse. You may want the ownership to be transferred to your spouse without it having to go through a lengthy or costly legal process.

Here, it’s critical to think about how your real estate ownership structure may impact your Estate Plan. For the reasons cited above, you may or may not decide that tenancy in severalty is right for you. It depends on your unique circumstances and desired outcomes. Note that you are not tied to any single choice. You can likely change your ownership structure by recording a new deed, although it may be difficult if you are already in a joint ownership structure. You can also consider estate planning strategies that could help you achieve your desired outcome, such as by transferring your real estate into a Trust so that you can exert more control and flexibility, and avoid the probate process. 

For further assistance, be sure to explore the myriad of ways in which Trust & Will can help you protect your assets and achieve the estate planning outcomes you desire. Whether you leave property to your heir through your Will, or decide to move your real estate into a Living Trust, we are here to help! Take our helpful quiz to find out how to get started. 

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