Buying a home is one of the most expensive decisions you make, so there are a lot of financial considerations to make. This can lead to many people assuming that buying a house is impossible for them to accomplish on their own, but what if you didn’t have to do it alone? You can purchase property, assets, and businesses with another person or a group of people. For those ready for their homeownership, but need help with the down payment, a joint tenancy may be the answer to a more attainable life-long goal. However, what does joint tenancy mean? Let’s find out!
Want to Learn More About Crypto? Download our Handy Flyer
What is Joint Tenancy?
Joint tenancy refers to a legal arrangement where a property is equally owned by more than one person. Anyone can be in a joint tenancy agreement regardless of the relationship between them, whether it’s unmarried couples, relatives, business partners, or friends, each with equal rights and obligations to the asset.
How Does Joint Tenancy Work?
When setting up joint tenancy in traditional real estate, we must first look at the deed. A deed is a legal document used to hand over property ownership from one party to another. There are many types of deeds, each serving a specific legal purpose depending on the known or unknown history of the property, the existence of a lien, and/or obstacles like a mortgage. The most common types of deeds are:
- Deed of Trust
- Warranty Deed
- Bargain and Sale Deed
- Mortgage Deed
- Grant Deed
- Revocable Transfer on Death (TOD) Deed
A quitclaim deed is most used for transferring property within a family—such as parent to adult child, between siblings, or adding a spouse. This deed states that the current homeowner is relinquishing partial or all ownership of the property.
Adding a Family Member to Property Title Process
- After selecting the type of deed to use, you determine how owners will take title.
- Once the title is determined, complete all associated forms. Deeds must include the Accessor’s parcel number, full legal names of the parties (existing and new), the document transfer tax or tax exemption form, as well as the legal description of the property.
- Sign and notarize the document. Record the deed along with a Preliminary Change of Ownership Report obtained at the accessor’s website or office. Complete a Tax Affidavit if required.
- Pay the recording fee with the other deed costs. Total costs can vary but expect to pay a few hundred dollars.
Tokenization of Real Estate
Parties involved in real estate transactions have experienced some of the most complex and expensive transactions facing so many rules and regulations—and the number of steps involved in setting up joint tenancy underscores this. However, there is a new, easier method of securing transactions real estate transactions. This method is called tokenization, which represents ownership of an interest in real estate with virtual tokens existing on a blockchain.
Instead of dealing with real estate transaction in the traditional, paper-based method, parties are able to engage in transactions digitally. See, using blockchain, the property can be tokenized into one or many tokens and whoever holds those tokens in his/her crypto wallet owns the property.
For example, let’s say three people own a house and they tokenize the property. Each of the three co-owners has a token in their respective wallet. Then, one of them needs to move. That person gives their token to one of the other co-owners. The theory—because this is still a hypothetical scenario at the time of writing—says when the remaining two find a new roommate, they simply give the third token to the new co-owner.
Thanks to blockchain technology, the purchase and sale of real estate tokens can be conducted with standardized smart contracts. One benefit of turning to smart contracts is they can compile all the necessary documents into a single database, making the homebuying process much easier. Attorney and agent fees decrease because the process becomes more transparent.
Millennial Blockchain: The Key to Tokenization
The concept of tokenization of real estate assets through blockchain is transforming real estate and has the potential to change the way people invest in it. When it comes to joint tenancy, there are a lot of transactions and people involved. This shows how blockchain, smart contracts, and tokenization make transactions easier to conduct and ownership can be transferred quickly and securely. If you have any questions, contact Millennial Blockchain today. Our team can help you make the home buying process better.