Ownership of Real Estate in Oregon
Ownership of real estate is more than just having your name on the deed. It is important to make sure that the way ownership of real estate is documented correctly reflects your wishes and rights. Oftentimes, real estate plays a role in estate planning, and it is important to think through issues such as inheritance and tax implications when determining what form of ownership makes the most sense.
The first and common way to hold title to property is for a person to own real estate in their individual name. For example, if John Smith holds property in his name, then we would say he holds title to the property in his personal capacity. In practical terms, this means that if Mr. Smith dies, then the property passes according to his will, and if there is no will, then it passes to his heirs according to the rules of intestate succession.
“Intestate succession” refers the default laws of the state which determine how property is inherited if there is no will or other estate planning document in place to express the wishes of the deceased. Oregon Revised Statutes Chapter 112 generally describes the laws of intestate succession in the state of Oregon. Essentially, intestate succession is the government determining for you what should happen to your property.
A second way to hold property is as a tenant in common. A “tenant in common” refers to a transfer of property to two or more unmarried individuals without a right of survivorship. Partly this is dictated by application of an Oregon statute, ORS 93.180(1)(a), unless ownership documents are drafted to avoid creation of a tenancy in common.
A tenant in common may or may not equally own property with another tenant in common. When a tenant in common dies, then their ownership interest passes according to her will, and if there is no will, then it passes to her heirs according to the rules of intestate succession.
A tenancy in common does not involve survivorship as a means for transferring ownership of property. “Survivorship” refers to a situation when one property owner dies and their ownership interest passes to any other surviving owner(s). If a tenant in common dies, then any remaining tenant(s) would not obtain ownership of the deceased tenant in common.
A tenancy by the entirety is a third type of ownership of real estate. A “tenancy by the entirety” refers to a transfer of property to a married couple. This type of ownership carries with it the right of survivorship. If one spouse dies, then the surviving spouse automatically inherits the deceased spouse’s ownership interest.
Under ORS 93.180(1)(b), a transfer of property to a married couple automatically creates a tenancy by the entirety, unless the deed clearly expresses otherwise. In Oregon, individual spouses can technically own property separately from their spouse; however, in the context of divorce, property owned by a spouse individually may be considered by a judge who is determining property division.
Domestic partners may own property in the same manner as married persons of the opposite sex. In Oregon, the rights of domestic partners are generally governed by ORS 116.300 – 116.340. In order to qualify as “domestic partners,” a same-sex couple must properly register their domestic partnership with the appropriate county clerk.
Real estate may be owned by an entity. An entity may be listed on the deed as the owner, and the entity may be an LLC (limited liability corporation), corporation, partnership, joint venture, etc. In order to ensure that the entity’s ownership of property is secure, the entity should be properly formed and the structure for management and decision-making should be clear. When there is a change in the entity, there also is a need to examine whether the entity’s ownership needs to be updated to reflect the change.
If an entity is not properly formed, it dissolves, or its status is somehow in question, then issues may arise regarding its ownership of property. Similarly, if issues arise regarding management or decision-making for the entity, then such issues may impact the entity’s real estate interests, as well.
Real estate may also be owned in a representative capacity. Here, ownership is held in the name of the person(s) acting in their capacity as the legal representative of the actual owner. Ownership in a representative capacity occurs in various situation, and includes a personal representative in a probate case; a conservator or guardian in a protective proceeding; a trustee of a trust; and a trustee in bankruptcy.
Where ownership of real estate is in a representative capacity, then it is important to ensure that the scope and responsibilities of the legal representative are clearly outlined and monitored. A legal representative’s authority to act for the true owner should be easily verifiable in a legal document.
While title officers, realtors, mortgage brokers, and government staff may be extremely helpful during a real estate transaction, they are not authorized to provide legal advice regarding ownership of real estate and how best to structure it. You should consult with an attorney who understands the context and what you are looking to accomplish, to ensure ownership of real estate is correctly reflected in a deed and other legal documents.
How ownership is structured may have significant implications for inheritance, rights, and liabilities of the owner and representative. Additionally, each form of ownership should be reflected by the use of carefully selected language to ensure ownership is clear. Many legal issues related to ownership of real estate originate from sloppy, imprecise, or incorrect language in a deed.
If you have questions about ownership of real estate in Oregon, please contact Coast Land Law for a consultation about how you can best protect your property rights. We have worked with clients to help them determine the best form of ownership of real estate, as well as work through problems when ownership of real estate is not reflected correctly in documents. We work with clients who have real estate interests in Clatsop and Tillamook Counties, as well as in the Portland area.