Owning property wholly by yourself can be great, but it does carry with it some significant risks that you should be aware of. With sole ownership comes sole responsibility, which means that if something goes wrong, you’re on the hook to fix it yourself or pay someone else to do it for you. If you’re planning on becoming the sole owner of a new piece of property, here are some things you need to know before diving in headfirst.
The Basics of Sole Property Ownership
Unlike co-ownership, sole ownership is a simple form of property ownership in which an individual owns all the rights and interests in the property and can sell, lease, or give the property to another party without anyone’s permission. If a sole owner passes away, their property must go through probate, which means it will be in limbo until the sole owner’s will is proved to be legally binding. In some cases, this could take years while the estate is administered.
A similar situation occurs if a sole owner needs to take out a loan or mortgage on their property; they would need to have a joint tenant (joint tenancy) who agrees with the terms of the loan agreement.
In essence, a sole owner is one who is legally able to hold a title. The majority of sole owners of real estate are single and married people, along with businesses with corporate structures that allow them to invest in or hold real estate.
The Benefits of Sole Ownership
One of the main advantages of being a sole owner is the ease with which you can conduct transactions because there is no need to get authorization from other parties.
One of the major appeals of sole ownership is that decisions on how to use the property, when to sell, and other such things are made by the owner and not a group of other people like tenants.
The Challenges of Sole Property Ownership
One obvious disadvantage of sole ownership is the potential for legal issues should the owner die or become incapacitated. Unless specific legal documentation, such as a will, exists, the transfer of ownership can become very problematic upon death.
A major drawback of sole ownership is the additional complexity for a property owner’s heirs. To transfer the title, a sole owner’s heirs will need to probate their estate, which can be expensive and time-consuming.
Final Remarks On Sole Ownership
Although sole ownership in real estate has some benefits, there are also a few potential drawbacks that you should be aware of before making a decision. For example, as the sole owner you will be fully responsible for any mortgage or loan payments, as well as property taxes and insurance. Additionally, if you ever decide to sell the property, you will have to go through the entire process on your own. However, if you are comfortable with these responsibilities and feel confident in your ability to handle them, sole ownership may be the right choice for you.