Single family home with blue overlay that says ‘what is title to residential property’
Real Estate, Residential Real Estate

What is Title to Residential Property in Illinois?

February 3, 2021

What is Title to Residential Property in Illinois?

Single family home with blue overlay that says ‘what is title to residential property’

In a residential real estate transaction, there are various methods of holding title to residential property. Holding title to residential property refers to the manner that one person or multiple individuals own the residential property.

In Illinois, residential property can be owned by an individual owner or jointly among multiple co-owners. The sole owner or joint owners’ property rights are determined by the manner they take title to the residential property. In this article, we will discuss the common methods an individual can hold title to Illinois residential property, such as a single family home, townhome, condominium, or multi-family building.

What is the difference between a deed and title to property?

A deed and title to residential property are two different concepts involving real estate ownership rights. The words “deed” and “title” are mistakenly used interchangeably to explain property ownership and often cause confusion. However, the terms “deed” and “title” are very different.

Title or Holding Title: This refers to the bundle of rights (also known ownership rights) that a sole owner or multiple owners have in the residential property. The bundle of rights incudes:

  • Right of Possession
  • Right of Control
  • Right of Exclusion
  • Right of Enjoyment
  • Right of Disposition

Deed: A written document that transfers real property from the seller to buyer. A deed must comply with Illinois law and contain specific information, such as the residential property’s legal description, tax identification number, address, and state how title the property is held. In a residential real estate transaction, warranty deed and quitclaim deed are the most common types of deeds used to transfer property.

Individual Ownership of Residential Real Estate

In Illinois, an individual can own residential real estate in their name. In the deed, the seller (also known as the grantor) transfers their ownership rights in the residential property to the individual buyer (also known as the grantee). If the buyer needs to change the ownership type in the future, the sole owner can create a new deed conveying a different type of property interest.

If a buyer is married, they can take title as the sole individual owner, which means their spouse has no interest in the property. However, the title company will require the non-owning spouse to execute a disclaimer deed confirming they have no interest in the residential property.

Multiple Owners of Residential Real Estate

If multiple people want to own residential property as joint owners, the buyers will need to decide the best manner to hold title to the residential property. If multiple people, such as a husband and wife or siblings, seek to purchase and own residential property, Illinois law provides three main ways they can take and hold title:

  • Tenancy in Common
  • Joint Tenancy
  • Tenancy by the Entirety

The manner co-owners take and hold title to the residential property can impact many things, such as taxes, liability, property decisions, and property transfers. The deed transferring the residential property will contain specific language that will dictate the type of ownership interest you will have in the property.

Tenancy in Common

Tenancy in common is a form of co-ownership by two or more people having an undivided, but not necessarily equal, fractional interests in the residential property. In a tenancy in common ownership, the co-owners of property have an undivided fractional interest in the property, which means each owner has an equal right to use the entire property without having an equal ownership percentage. In order to sell or convey the entire property, all owners must join in the transfer.

As tenants in common, the co-owners have the right to sell, gift, or transfer their interest in the property without the other owners’ permission. Unlike a joint tenancy or tenancy by the entirety, there is no right of survivorship if one owner dies. The deceased’s ownership interest will pass to their heirs instead of the co-owners.

In Illinois, if the deed does not state the specific way title is held among two or more residential property owners, the law presumes that the property is owned jointly as tenants in common. If the deed does not state the specific ownership percentage, Illinois law presumes that each co-owner holds an equal ownership interest. However, the deed creating a tenancy in common can establish each person’s ownership percentage in the residential property.

Joint Tenancy with the Right of Survivorship

Joint tenancy is a form of ownership with two or more people owning an equal and undivided interest in a property with the right of survivorship. In Illinois, joint tenancy is not presumed. The deed must explicitly provide that a joint tenancy with the right of survivorship is created, and not a tenancy in common.

In order to for two or more people to own property as joint tenants with rights of survivorship, the four unities of ownership must be satisfied. Under the Illinois Joint Tenancy Act, the four unities of ownership are:

  • Time: All owners must take title to the residential property at the same time
  • Title: All owners must take title to the residential property with the same document
  • Interest: All owners must have an equal interest in the residential property as a whole
  • Possession: All owners must have an undivided right to possession in the residential property

The joint tenants, or co-owners, are entitled to equal rights, income, real estate taxes, and property use. If a joint tenant destroys one of the four unities, it will extinguish the joint tenancy relationship with the right of survivorship regarding their interest. However, the joint tenancy of the other co-owners remains unaffected. The new owner becomes a tenant in common with the other joint tenants.

Unlike tenants in common, when a joint tenant dies, the right of survivorship automatically operates to pass the deceased owner’s title to the surviving owners.

Tenancy by the Entirety

Tenancy by the entirety is a form of property ownership reserved for married couples. In Illinois, the deed must explicitly provide that the property is not owned as a joint tenancy nor as a tenancy in common, but as tenants by the entirety. In a tenancy by the entirety, each spouse owns an equal and undivided interest in their primary residence with the right of survivorship. A tenancy by the entirety is limited to a married couple’s ownership of a single residence used as a homestead during their marriage.

Essentially, tenancy by the entirety is a specialized form of joint tenancy with rights of survivorship that is only available to married couples for their homestead property. As with joint tenancy, tenancy by the entirety requires the four unities of ownership with the additional requirement of marriage. Additionally, upon the death of one spouse, the surviving spouse becomes the property’s owner. Unlike other types of joint ownership, one spouse cannot sell or convey the property without the other spouse’s consent.

Other Methods to Hold Title in Illinois

In addition to the methods listed above, there are other ways to hold title to residential property that are beyond the scope of this article. However, we will briefly discuss the other methods to hold title.

  • Land Trusts: An Illinois land trust is a mechanism used to handle ownership in real estate. With a land trust, the property title is held by a trustee, and the property’s beneficiary (the real owner) retains the ability to enjoy all the rights and responsibilities of owning the property. 
  • Living Trusts: A living trust (also called a revocable trust) goes into effect during the trust creator’s lifetime. A legal document, the trust agreement, specifies the trustee and explains how the trust should be administered. A living trust is capable of being changed, amended, or terminated. A trust agreement can place investments, bank accounts, real estate, vehicles, and valuable personal property in the trust for grantor’s benefit during their lifetime and explain how they would like to distribute the assets upon their death.
  • Partnerships & Limited Partnerships: A partnership is an association of two or more people that conduct business for profit. Under Illinois law, a partnership can acquire, own, assign, mortgage, and lease real property.
  • Corporations: Under Illinois law, a corporation, such as an Illinois limited liability company, can acquire, own, and dispose of real property. Additionally, a foreign corporation may hold title to the real estate even though it is not licensed to do business in Illinois.

Contact Kasan Law

Whether your legal needs involve the sale or purchase of residential property, contact Kasan Law’s Chicago and Illinois residential real estate attorneys to schedule your free and no-obligation consultation by calling (312) 300-6724, e-mailing us at Info@LawKasan.com, or schedule your consultation online.

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