Congratulations on deciding to purchase property here on the island of Hawaii. During the transactional process you will need to determine how you want to take title (vesting). This vesting may range from a simple sole individual ownership, or tenancy in common where there are two or more owners, or in a more complex form with a parnership or trust agreement. Most commonly, this ownership may be held in four ways. The four principal types of tenancies or ownership interests are
1. Tenancy in Severlaty- When one person only owns the property it is referred to as sole tenancy or tenancy in severalty. It simply means that the proeperty is owned by one person ONLY and he alone can use, mortgage, or dispose of the property as he desires. The word severalty does not mean “several” as one might thing but rather that the interest of the owner is “severed” and is separate and apart from the interest of any other person. For business purposes, the person may use his or her name or an assumed name. The sole proprietor is fully liable for all business debts, moreover, creditors can attach his personal assets.
2. Tenancy in Common– This typd of tenancy exists when an estate of land is held by two or more persons, with the outstanding feature that upon the death of one party, his share descends to his next of kin or to the parties names in his will. Each tenant in common holds an estate in land by separate and distinct titl, but with the unity of equal rights of possession. Thus, even though a tenant does not necessarily have the same proportionate share of interest as a joint tenancy, still he is entitle to undivided possession of the property regardless of the size of his share of the whole. It is important to state that the percentage of interest of each owner, otherwise it will be deemed to be equal. There are no particular words necessary to create such a tenancy, thus, unless the conveyance SPECIFICALLY states otherwise, there is the presumption that a conveyance to two or more persons creates tenancy in common.
Under this type of ownership one is free to sell, give away or will away his interest as he sees fit and the new owner sipmly becomes a new tenant in common with the other owner or owners. If one tenant mortgages his interest in the land it does NOT bind the others, it merely creates a lien on his interest ONLY.
3. Joint Tenancy– A joint tenancy is one that is intentionally created for two or more persons (co-owners) who are equally entitle to an undivided interest in a specified piece of real property, with the distinguishing charagcteristice of the right of survivorship. Thus, upon the death of one of the joint tenants, his rights and interst pass to the surviving tenant or tenants without the need of probate proceedings. The intention to create the joint tenancy must be clearly stated, otherise a tenancy in common will be created. One may not will away this type of property ownership.
Note that at common law there are four unities which are considered necessary in the creation of a joint tenancy. These are Time, Title, Interest, and Possession. This means that the parties must have formed the tenancy at the same time, with the same type of title, must have equal shares of interest with each other and each be entitled to equal rights of physical possession. In this latter unity, this means that the owner could not specify he owned the south 40 acres, while his co-owner owned the north 40. Thus, each has an undividable interest in the whole parcel.
4. Tenancy by the Entirety-Tenancy by the entirety is similar to joint tenancy with the exception that there are onely two persons in the ownership and they MUST be husband and wife or legal domestic partners. Upon the death of either, the survivor automatically acquires title to the share of the deceased spouse free and clear of the claims of heirs and creditors of the deceased spouse. If they became divorce, however, the parties would then become tenants in common. This tenancy is NOT recognized in all states. WIth this type of ownership the personal or business debts of either spouse may not be attached to the property. In other words, a creditor of one spouse cannot force a sale of one half of the property to satisfy a judgement against that spouse. However, a creditor of both spouses could take legal action to force a sale of the property to satisfy a joint obligation.