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Joint Tenancy Explained

Most people immediately think of the right of survivorship aspect of the Joint Tenancy, which allows the shares of a property to be transferred to the surviving partner. However, there is a bit more to Joint Tenancy.

To start a joint tenancy there specific requirements that have to be met, starting with time, interest, possession, and title. Meaning that the owners must become join tenants of the same deed at the same time and take possession of the asset at the same time. Owning property using a joint tenancy has its advantages that we will outline below.

Profits and Rights to Rent

Joint tenants are generally given a share of the rent and any other profits that the property may receive.

Avoiding Probate

If one of the partners in the Joint Tenancy passes away and that partner has few additional assets at the time of their death, having a joint tenant with the right of survivorship may allow the late individual’s estate to avoid probate. Most states have a small estate statute that allows a survivor to bypass the process when the probate estate is under a specific value.

Right to Surviorship

A Joint tenancy allows the other tenant to inherit the decedent’s share at the time of passing. This typically involves a process that is automated and requires minimal paperwork to transfer.

The Promissory Note

The format of promissory notes differs per lender, however the idea is the same. The opening paragraph identifies the lender and borrower. The note will describe the terms of the deal including principal amount, interest rate and maturity date. Following the terms, the document will list several recitals. A recital is a statement of the facts contained within the transaction. With a secure note, one of the recitals will describe the security instrument. A security instrument can be a number of documents including a mortgage, assignment, security agreement, or a pledge agreement. It will read similar to, “Whereas the borrower has entered into a Security Agreement dated July 31, 2019 as collateral for the loan.”. This clause ties the promissory note and security agreement together, in effect collateralizing the loan.

Non-Payment

If a borrower begins to miss payments on a secured note, they will incur late charges. If the borrower exceeds 90 days of non-payment, the loan will be declared in default. If this happens, the lender will begin can pursue legal action. The process can depend on a number of factors including the type of loan, the collateral and the state judicial process. When completed, ownership of the collateral will be transfered to the bank. The lender will likely have legal expenses, and will usually work with a borrower in default before exercising its rights to the collateral. It may lower the interest rate, extend the repayment term or institute a temporary period where the borrower pays only the interest.

Flexibility

A key benefit that a promissory note provides both parties, is flexibility. Promissory notes allow you to specify how payments will be made whether in installments, at a future point in time or due upon signing. You can fully amortize the loan and make the payments on monthly schedule, or you can make equal payments due on a quarterly or semi-annual basis. This flexibility allows you to specify loan terms that best fits your needs or the needs of your company.

What Are the Advantages of Homesteading Your Property?

Homeowners have access to filing a homestead exemption. Basically, a homestead exemption allows you the homeowner to protect the value of your principal residence from creditors and property taxes. A homestead exemption can also protect a surviving spouse when the other homeowner dies.

Property Taxes

A homeowner’s understanding when it comes to homesteading their property most often has to do with the property-tax exemption. This advantage of homesteading pertains to protecting a portion of a home’s value from property taxes. A typical homesteading advantage is that it will exempt the first $25,000 to $75,000 of a home’s value from all property taxes. With a $50,000 homesteading exemption, you’ll only owe property taxes on the home’s remaining assessed value.

Forced Sale Immunity

With a homestead exemption, your home is shielded from a forced sale to satisfy creditors. The lender financing your automobile can’t force the sale of your home if you default on your auto loan. Homestead exemptions, however, don’t normally shield your home from forced sale in mortgage foreclosures or from defaulted property taxes.

Surviving Spouse Advantages

State homestead laws vary, but surviving spouses under homestead laws retain the homestead right to their homes for life. For surviving spouses, as long as they use and occupy the homesteaded property, they won’t lose homestead rights. Surviving spouses on homesteaded properties, though, must make any mortgage and other payments due in order to retain their homesteading rights.

Homestead Requirements

In order to declare a homestead on your home, it must be your principal residence. Your homestead exemption and its advantages last until you effectively abandon the homestead, too. Commonly, you abandon an old homestead when you declare another home your new homestead.