There are several ways that multiple owners may acquire title to Texas real estate by deed. Whether a particular form of co-ownership applies depends on the relation of the owners to each other.
General Principles of Joint Ownership of Texas Real Estate
Under common law principles, each co-owner was presumed to hold title with rights of survivorship. Rights of survivorship means that, upon the death of an owner, that owner’s interest in the real estate passes automatically to the surviving owner or owners. The last surviving owner receives the entire property.
A presumed right of survivorship can have the unintended effect of disinheriting a deceased owner’s heirs. Assume two unrelated owners acquire property for real estate investment. In this context, the owners probably do not intend for the property to pass to the surviving owner upon the death of one of the owners. But if the right of survivorship is presumed and the deed does not provide otherwise, that is exactly what will happen. The deceased owner’s interest will pass to his real estate investment partner instead of his family.
Because of the risk of disinheritance, many states—including Texas—enacted laws to change this presumption of rights of survivorship in jointly owned property. Section 101.002 of the Texas Estates Code provides:
If two or more persons hold an interest in property jointly and one joint owner dies before severance, the interest of the decedent in the joint estate: (1) does not survive to the remaining joint owner or owners; and (2) passes by will or intestacy from the decedent as if the decedent’s interest had been severed.
In other words, the default rule in Texas is that jointly owned property does not include a right of survivorship. But this is only a default rule. There are several ways joint owners can use Texas deeds and related documents to change this result.
Co-Ownership by Owners That Are Not Married to Each Other: Tenancy in Common and Joint Tenancy with Right of Survivorship
If joint owners of Texas real estate are not related to each other, there are two ways they may hold title to Texas real estate: (a) as tenants in common or (b) as joint tenants with right of survivorship.
Texas Tenants in Common (Joint Tenants Without Right of Survivorship)
Owners that hold title to Texas real estate as tenants in common are under the default rule mentioned above. When one owner dies, his or her interest passes through his or her probate estate. It does not automatically pass to the surviving joint owner.
Ownership as tenants in common is complicated by Texas community property law. With certain exceptions, Texas community property law presumes that any interest in real estate acquired by a married person during the marriage is jointly owned as community property with that person’s spouse. That rule applies even if the spouse is not listed on the deed to the property. This means that—in addition to the wording of the deed—actual ownership of the tenant-in-common interest depends on:
- the marital status of the person listed on the deed;
- whether he or she acquired the property during the marriage; and
- whether any special circumstances change the characterization of the marital property from community to separate property.
Tenancy in common is a good alternative for co-owners that want their interest in Texas real estate to pass to their heirs instead of the surviving joint owner. But tenancy in common comes with a significant downside: Because there is no automatic survivorship right, Texas probate may be required to transfer title to the deceased owner’s family. See Using Deeds to Avoid Texas Probate for a discussion of alternatives that can help avoid probate.
Texas Joint Tenants with Right of Survivorship
As the name suggests, owners that hold title as joint tenants with right of survivorship have a right of survivorship in the property. Upon one owner’s death, his or her interest not pass through his or her probate estate. Instead, the deceased owner’s interest will automatically transfer to the surviving joint owner or owners.
In many states, creation of a joint tenancy with right of survivorship only requires a short phrase in the deed to indicate that form of ownership. Texas law is different. To create a right of survivorship in Texas, the co-owners must specifically agree to hold title as joint tenants with right of survivorship. Specifically, Section 111.001 of the Texas Estates Code provides:
RIGHT OF SURVIVORSHIP AGREEMENTS AUTHORIZED.
(a) Notwithstanding Section 101.002 [quoted above], two or more persons who hold an interest in property jointly may agree in writing that the interest of a joint owner who dies survives to the surviving joint owner or owners.
(b) An agreement described by Subsection (a) may not be inferred from the mere fact that property is held in joint ownership.
This means that joint owners can hold title with rights of survivorship, as long as they “jointly … agree in writing to do so.”
Although this language seems straightforward, it is not always clear how to create the right of survivorship. The problem arises from the fact that Texas deeds are usually signed only by the transferors, not by the transferees. Because new co-owners do not sign the deed, it is unclear that they have “agreed in writing” to hold title with right of survivorship. Although case law hints that acceptance of a Texas deed that contains a right of survivorship may be enough to create the “agreement in writing” between the co-owners, that case law pre-dates the current version of the Texas statute.
Texas law has lagged behind most states in recognizing joint tenancies with right of survivorship. Because this form of ownership was accepted recently relative to other states, follow the statute closely . To be safe, many attorneys recommend that co-owners that wish to create a right of survivorship do so by separate written agreement signed by both co-owners. This clarifies that the co-owners have meet the statute’s requirement of a joint written agreement. See Marital Agreements and Survivorship Agreements for a discussion of agreements in Texas real estate transactions.
Joint tenancy with right of survivorship is a useful tool when the owner intends for the property to pass to the surviving joint owner. This could apply when two siblings co-own inherited real estate together and intend for the real estate to pass to one sibling upon the death of the other. On the death of one owner, transfer to the surviving owner is relatively simple and can often be accomplished outside of the probate process. See How to Remove a Deceased Owner from a Deed for more information about removing a deceased owner from the title to the property.
Although joint tenancy with right of survivorship is very common in other states and is clearly allowed by Texas law, some third parties—like lenders and title companies—have been reluctant to recognize this form of ownership. Some title companies will not insure joint tenancy with right of survivorship. Many lenders are uncomfortable with joint tenancy with right of survivorship language in the loan documents. If you plan to mortgage the property, check with the lender before creating a joint tenancy with right of survivorship.
Co-Ownership by Owners that Are Married to Each Other: Community Property and Community Property with Right of Survivorship
If the owners are married to each other, their legal ownership of property is governed by Texas community property law. Texas community property law treats most real estate acquired during marriage as belonging to both spouses, even if the Texas deed only lists one spouse.
Real estate held as community property does not, by default, include survivorship rights. On the death of one spouse, the surviving spouse will continue to own—not to inherit, but continue to own—his or her one-half interest in the real estate. The remaining half will be governed by the deceased owner’s will or Texas intestacy law. See Texas Community Property for a more detailed explanation of the effect of holding title as community property.
If the spouses want to create survivorship rights in their community property, they may do so by agreement. Section 112.051 of the Texas Estates Code provides:
AGREEMENT FOR RIGHT OF SURVIVORSHIP IN COMMUNITY PROPERTY. At any time, spouses may agree between themselves that all or part of their community property, then existing or to be acquired, becomes the property of the surviving spouse on the death of a spouse.
This section allows the spouses to create survivorship rights in community property by written agreement called a Community Property Survivorship Agreement. The Community Property Survivorship Agreement must be in writing and signed by both spouses. It must also include special language to create the survivorship rights. As the statute states, the agreement may be created at any time. But it is good practice to create the Community Property Survivorship Agreement when the spouses acquire the real estate and to record it in the land records with the deed.
As is the case with non-spousal rights of survivorship, removing a deceased spouse from the title is relatively simple and should not involve a court proceeding. See How to Remove a Deceased Owner from a Deed for more information about removing a deceased spouse from the title to the property.