What is a tenancy by the entirety

What is a tenancy by the entirety?

The tenancy by the entirety is a unique estate that may be held only by a married couple or, in New Jersey as of February 19, 2007, civil union partners.  (For simplicity’s sake, we’ll include civil union partners as a married couple in the below discussion.)

 According to our colleague and noted title professional Lawrence Fineberg, Esq. “Its origin is said to be biblical in nature.  At common law, consistent with the biblical statement quoted below, a husband and wife were viewed as a single entity. Although this is no longer the case, some of the incidents of tenancy by the entirety are vestigial remnants of this conception.” (Citations omitted.)

 Unlike other forms of co-tenancy, a tenancy by the entirety may have only two co-tenants, who are married to each other.

 A deed or a testamentary devise to a married couple is presumed to create a tenancy by the entirety, in the absence of contrary wording in the deed or will. So, a deed from a spouse conveying the real estate owned in her name to herself and her spouse, vests title in them as tenants by the entirety.

 What if the couple is not in fact married at the time of the deed? In that situation, they will hold as tenants in common, even if they eventually marry. Likewise, say an engaged couple takes title to a home as tenants in common or as joint tenants, a tenancy by the entirety is not automatically created by their subsequent marriage.  So, if they wish to hold title as tenants by the entirety, a new deed must be created which vests title in them as such.

 But, if the parties are in fact married to each other at the time of the deed, a tenancy by the entirety will be created (in the absence of contrary language), even if their marital status is not recited in the deed.

 In New Jersey, as mentioned above, civil union partners are also presumed to acquire title as tenants by the entirety. However, domestic partners may not do so.

 Where title to realty is held by spouses married to each other as tenants by the entirety, the death of one spouse results in the vesting of the entire interest in the survivor automatically.

 The entry of a judgment of divorce automatically destroys the tenancy by the entirety, so that former spouses hold title as tenants in common.

 A tenancy by the entirety may not be terminated by the unilateral act of either spouse,  If one spouse attempts to convey to a stranger, however, the grantee succeeds to the interest of the grantor-spouse, including that spouse’s right of survivorship. The same result is reached where a judgment creditor or foreclosing mortgagee of only one spouse attempts to enforce its lien against property held by the entirety.

 Portions of the above have been adapted from Fineberg, N.J. Title Practice (NJLTI, 5th Ed. 2021).

 Disclaimer: The information included is designed for informational purposes only. It is not legal, tax, financial or any other sort of advice, nor is it a substitute for such advice. The information may not apply to your specific situation. We have tried to make sure the information is accurate, but it could be outdated or even inaccurate in parts. It is the reader’s responsibility to comply with any applicable local, state, or federal regulations. Vested Land Services LLC and their employees make no warranties about the information nor guarantee of results, and they assume no liability in connection with the information provided.

We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!

For your real estate purchase or mortgage refinance or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow@vested.com

@vestedland

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Condominium vs. Co-operative: What’s the Difference?

 Being a homeowner can be irksome and can take the fun out of homeownership itself.  If that’s the case, it might be time to make a move to either a condominium (condo) or co-operative (co-op).

 Condos and co-ops offer the benefit of not having to handle all of the routine upkeep you get in a house, but, as with everything in life, there a pros and cons to both.

 What is a co-op?

 First, please understand that co-ops are unique as far as ownership is concerned. Co-ops are different from condominiums and other residential arrangements because they aren’t considered “real property.” They are “interests in real property.” When you buy into a co-op you are buying shares in a corporation which owns the land and building.  You ownership in the co-op corporation entitles you to an apartment or unit usually embodied in a proprietary lease. But that’s not the only difference between a co-op and condo.

 The basic differences:

 Ownership

 Condo: Buying a condo means you own the real estate, including an interest in common areas.  Those common areas can be lawns, the swimming pool, or the parking garage.  There is no approval process when you buy your condo, and you don’t get a chance to pick your neighbors.

 Co-op: When you buy into a co-op apartment, you’re buying shares that entitle you to a portion of the building. A co-op board will have to approve you in as a new owner.  Proceedings, in the vast majority of cases are not subject review.  When you sell your co-op, the buyer has to go through the same procedures you did when you bought.

 Fees and expenses

 Condo: Condos charge maintenance fees, usually on a monthly basis. This covers maintenance costs for the building’s common areas.  They can include expenses ranging from lawn maintenance, pool upkeep, snow removal and certain routine maintenance that all buildings need.  See below about real estate taxes and mortgages.

 Co-op: Co-ops will also charge fees, but they are often higher in a co-op and sometimes include items like utilities. They will include a proportionate share of the building’s mortgage and real estate taxes.  See below.

 Keep in mind maintenance fees for condos and co-ops may increase over time.

 Cost

 Condo: Condos usually cost more to buy than a co-op, but you have more flexibility with your investment. It’s usually easier to sell or lease out a condo.

 Co-op: While co-ops will have higher fees, the initial cost of buying into a co-op is usually cheaper than a condo. However, it is almost impossible to rent out your co-op apartment.

 Property taxes

 Condo: Condos are individually owned, so owners are taxed separately just as they would be in a single-family home.

 Co-op: Co-ops are considered a single property, with a single property tax assessment that is split among the owners and usually included in the maintenance fee. Property taxes are typically lower on co-ops than on condos.

 Tax deductions

 Condo: If you own a condo, the mortgage interest and property/real estate taxes are deductible – just like a home.

 Co-op: Co-op residents can deduct their share of property taxes and mortgage interest.

 Disclaimer:

The information included is designed for informational purposes only. It is not legal, tax, financial or any other sort of advice, nor is it a substitute for such advice. The information may not apply to your specific situation. We have tried to make sure the information is accurate, but it could be outdated or even inaccurate in parts. It is the reader’s responsibility to comply with any applicable local, state, or federal regulations. Vested Land Services LLC and their employees make no warranties about the information nor guarantee of results, and they assume no liability in connection with the information provided. 

We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!

For your real estate purchase or mortgage refinance or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow@vested.com

@vestedland

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Sometimes you just need a lawyer or a good title agent

Reading the Internet can get you more confused than it's worth.

A recent column in a generally good consumer website, NJMoneyHelp.com, has come up with a klunker for an answer to a common question we receive in our office.

The question- How can I take my ex-spouse off my home's deed.

Here's the column, our comments are interspersed in bold. 

Q. I purchased a home while married. My husband was incarcerated at the time. He signed papers giving up all rights to my home. We later got divorced. In the divorce decree, I was granted sole ownership of my home. Recently, I paid my home off in full. However, when I received my paperwork showing that it was paid off, his name and my name were both listed as owners.  (On what document was both names listed? Was it the deed or mortgage or both.  If he was incarcerated at the time, how did he sign the mortgage?) What do I need to do to get his name removed?
— Homeowner

A. We understand that seeing his name there was an unwelcome surprise to you.

You can take steps to remove your ex-spouse from the deed.  (In reality, yes, you can take steps but the first step is to get the  ex-husband to agree.)

Typically, you would do this by filing a quitclaim deed, said Marnie Hards, a certified financial planner with Aznar Financial Advisors in Morris Plains.

“This document should be signed in front of a notary and then filed in the county in which you live,” Hards said. (The ex-husband is the party that must sign the deed.) “This should remove your ex-husband from the deed.”

Once the quitclaim deed is filed, the spouse who has been removed may no longer access the property without the sole owner’s consent, Hards said.  (I am not sure what caused the financial planner to say this.  No where in the question was the issue of access raised.)

Here’s how you do it.

First, visit Register of Deeds in the county where the property is located. Ask for the quitclaim form, a copy of the existing deed as well as a legal description of the property, Hards said.  (Well, county clerks and registers are not in the business of giving out forms of deeds, although you may find one on his or her website.  Some county clerks may have mercy on you and help you find the recorded deed, why the questioner doesn't have a copy is not explained, and they'll charge you a fee to copy it.  The deed contains the legal description.)

“Then, you will need to fill out the quitclaim deed. Make sure to use the legal description provided to you when you fill out the form,” she said. “You would be the grantee and your ex-husband would be the grantor. It is important that he transfer rights in the entire property.”  (Assuming he has agreed to sign the deed in the first place.)

A notary public must witness both of you sign the form, she said.  (Only the ex-husband need sign the deed.)

The completed quitclaim deed and the required fee can then be submitted to the Register of Deeds, she said.  (No one has mentioned another necessary form that must be signed by the ex-husband.  It's called a Seller's Residency Certification/Exemption Form GIT/REP-3.)

Email your questions to Ask@NJMoneyHelp.com.

This story was originally published on March 18, 2021. It appeared on the Web here.

Frankly, the questioner should be dealing with a lawyer or a good title agent who could help her understand how her title is held.

We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!

For your real estate purchase or mortgage refinance or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow@vested.com

@vestedland

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The Tax Breaks for Homes That Help You Now

Homeowners need to know these income tax facts

Home office and second homes deductions

A column in the Wall Street Journal answers some timely questions about income taxes and your home.  

As this article appears behind a paywall at wsj.com/articles/the-tax-breaks-for-homes-that-help-you-now-11596792602, the full text is below.

August 7, 2020

By Laura Saunders

 The coronavirus pandemic has had profound effects on real estate, and the sudden shifts make it a good time to delve into tax breaks available to home buyers and homeowners.

 Many people are scrambling to get mortgages now that interest rates are under 3%, either to buy a home in a red-hot market or refinance debt on an existing one. Others, who are working from home far longer than expected, are itching to renovate their nest or add workspace.

 And then there are those who have moved to vacation homes for the long haul. Some are even social-distancing in motor homes or boats.

 The tax landscape for homeowners changed with the 2017 tax overhaul, which made the long-cherished mortgage-interest deduction irrelevant for many. For 2018, 13 million filers claimed this write-off, down about 60% from 2017’s total of 33 million filers. The overhaul also limited interest deductions on home-equity loans and repealed a benefit for some home offices.

 

But other tax breaks for homes remain, such as one allowing mortgage-interest write-offs for motor homes and boats. Loosened rules on withdrawals from retirement accounts could provide a source of funds for home buyers who need cash this year. A spokeswoman for TD Bank said it’s allowing such withdrawals to be used for down payments

 Whether you’re part of a backlog of buyers or mulling changes to your current home, here are answers to key questions—plus examples to show how the rules apply in different situations.

 Will I get a mortgage-interest deduction if I buy a home?

 Yes, but it might not lower your taxes, if your “standard deduction” is higher than your total itemized deductions listed on Schedule A.

 The 2017 overhaul nearly doubled the standard deduction, and now it’s $24,800 for most married couples filing jointly and $12,400 for most single filers. So millions fewer homeowners are itemizing.

 Typical itemized deductions are for mortgage interest, charitable donations, medical expenses and state and local taxes (SALT), such as property and income or sales taxes. SALT deductions are limited to $10,000 per tax return.

 Here are examples provided by Evan Liddiard, a CPA who directs federal tax policy at the National Association of Realtors. Say that a married couple buys a $400,000 home with a 20% down payment, a 3% interest rate and a 30-year fixed rate mortgage. The first-year interest deduction would be about $9,500.

 If the couple deducts that amount, along with the limit of $10,000 for SALT, they’d still need more than $5,300 in charitable or other write-offs to get above the $24,800 threshold.

 Many single filers will find it easier to get a benefit. If a single person buys a $250,000 home with 20% down and a 3% interest rate, the first-year interest is about $5,950. If this buyer lives in a higher-tax area and has $10,000 of SALT write-offs, then his total itemized deductions are more than $3,500 above the $12,400 threshold, even without other write-offs.

 How much mortgage interest can I deduct?

 For new mortgages issued after Dec. 15, 2017, taxpayers can deduct interest on up to $750,000 of mortgage debt on up to two homes.

 For mortgages issued before that date, a “grandfather” provision allows interest deductions on up to $1 million of mortgage debt on up to two homes.

 Here’s how these two rules can interact. If a homeowner has a grandfathered $800,000 mortgage on a first home and wants to borrow $100,000 to buy a second home in 2020, then the interest on the $100,000 wouldn’t be deductible. For more information, see IRS Publication 936.

 Note that the $750,000 limit applies per tax return, so unmarried couples who buy homes together can deduct interest on up to $1.5 million of mortgage debt. Some couples in high-cost housing markets have refrained from marrying in order to double their deduction.

 I’m refinancing my mortgage at a lower rate. Can I still deduct the interest?

 Yes, in many cases. But current law disallows deductions on the “cash-out” portion of a refinancing unless it’s used to improve a home.

 Say that a borrower with a $400,000 mortgage balance refinances at a lower interest rate but raises the balance to $450,000 in order to have $50,000 for college tuition. In that case, only the interest on $400,000 would be deductible. But if she uses the $50,000 to add a room, then interest on the $50,000 would be deductible, says Mr. Liddiard.

 Are “points” paid to get a mortgage deductible?

 Yes. Points are upfront interest payments that typically reduce the rate. Points paid for a first mortgage are usually deductible the year it’s taken out, while points paid on a refinancing typically must be deducted over the loan’s term.

 I want to borrow to buy a boat or RV. Can I count that as a home and deduct mortgage interest?

 Maybe! Mortgage interest on debt used to buy a motor home or boat can be deductible if it has cooking, sleeping and toilet facilities. The write-off is also subject to the other requirements, such as no deductions for more than two homes.

 Mortgage interest on these homes may not be deductible for the alternative minimum tax—but far fewer people owe this levy than before the 2017 overhaul.

 Can I still deduct interest on a home-equity loan?

 It depends. Until the 2017 overhaul, interest on up to $100,000 of home-equity debt used for any purpose was deductible.

 Now, such interest is deductible if it’s used to make substantial improvements to a home. The debt must be secured by the property it’s used for, and the $750,000 and $1 million total debt limits apply.

 Now that I’m working from home, can I take a home-office deduction?

 Not if you are an employee, because the 2017 overhaul repealed that write-off. But your company can likely reimburse you for your work expenses during the pandemic and get a deduction. The payment won’t be taxable to you, says Gerard Schreiber, a CPA who specializes in tax issues involving disasters.

 Workers who are self-employed, either full-time or part-time, can often deduct home-office expenses on Schedule C for a space that’s used regularly and exclusively for the business. (That means no watching sports on a couch in the office during off-hours.) For more information, see IRS Publication 587.

 I’m spending more time at home, and I want to remodel my house and add office space. Are there tax breaks for remodeling?

 Yes, in some cases. A business owner who builds or upgrades office space at home may be able to take deductions for costs. For example, a photographer’s expenses for adding a studio and darkroom to her home could be deductible over time on Schedule C, as could the interest on a borrowing to finance it.

 For homeowners without businesses, the cost of improvements such as an addition can raise the “cost-basis” of the house and reduce taxable profit when it’s sold. So if a house was bought for $250,000 and the owner made $150,000 of improvements, then the starting point for measuring the gain after a sale would be $400,000. The interest on a home-improvement loan can also be deductible.

 This year many people can withdraw more from such savings plans than in the past, and on better terms, because Congress loosened rules for people affected by the pandemic. These savers can withdraw up to $100,000 from IRAs and many 401(k)s without owing the 10% penalty that would often apply. Then they can spread the tax over three years or pay all or part of the withdrawal back, according to IRA specialist Ed Slott.

 I have a city home and a vacation home, and until the pandemic I lived in the city. If I make my vacation home my primary residence, can I avoid owing city taxes?

 Maybe—but rules vary widely, so seek professional advice tailored to your area. For example, people with jobs based in New York often owe taxes to New York even if they’re residents of other states.

 To switch your vacation home to your primary home, you may need to count days spent in each place. You may also need to make moves showing you’ve truly changed your residence, such as switching doctors, children’s schools, your place of worship, and where you vote.

 Write to Laura Saunders at laura.saunders@wsj.com

We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!

For your real estate purchase or mortgage refinance or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow@vested.com

@vestedland

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High closing costs? Who's to blame?

Vested Land Services title agent title insurance refinance new jersey

Closing fees are a component of the home purchase or refinance. This article from the New York Times is a tad misleading about these costs and where the blame, if that's the right word, lies.

FOR some people, a major hurdle to homeownership is the closing costs that come on top of the required down payment. There are fees for everything from title searches to deed recordings, and if you happen to be buying in New York or New Jersey, you’ll find some of the highest costs in the country.

But these fees have been easing, according to a report released last week by Bankrate.com, which found that average closing costs, including mortgage origination fees, fell 7 percent nationwide from 2011 to 2012. In New York they fell 12 percent.

OK, so where do these high fees come from? Not from third party suppliers such as title agencies, but from lenders and government officials.

Yet, the article continues,

Title insurance is the biggest cost, averaging around 1 percent of the loan balance. Mr. McBride suggested that borrowers shop around, eliciting good-faith estimates from a number of lenders.

Poppycock. Rates in New Jersey are regulated as they are in New York and costs will be identical from title agent to title agent. Companies such as ours survive based on the level of service we provide our clients to get buyers and borrowers to the closing table as safely and expeditiously as possible. (Unless your title agent is owned by a bank or controlled by a real estate agency whose goal is to get you to the table no matter what.)

But the buyer/borrower cannot escape government charges. The county recording fee for an average mortgage in New Jersey is $240! And, in New York, you must add government mortgage taxes that add thousands to the cost of a home or mortgage.

The only place where the buyer/borrower can maneuver is with the lender. There are three words to remember when applying for a loan, shop, shop and shop for the mortgage and if the loan officer cannot explain something to your satisfaction, run for the hills.

Read the full article.

 

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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