Understanding Property Ownership

The following comments are intended only to assist in understanding the basic concepts of property ownership/title and should NOT be construed as legal advice or anything more than just an entry level presentation of these concepts. A licensed lawyer should ALWAYS be engaged regarding any questions of legal ownership/title.

A person who owns real estate in the United States is considered to own the rights to the actual physical land, what is beneath the land, the structures permanently attached to the land, as well as the air space above it. Ownership rights are akin to a "bundle of sticks" or "bundle of rights," a concept that descends from the Middle Ages. These six rights (six sticks) include the rights of:

  1. Disposition - can sell, lease, or will a property to another
  2. Encumber - can mortgage interest in or give someone else an interest in the property
  3. Exclude - can have sole use of the property
  4. Possession - can occupy the property
  5. Quiet Enjoyment - can use the property without being bothered by former owners or tenants
  6. Control - can use the property in any way that is lawful

An owner can have various degrees of ownership ranging from all to some to none of these rights.

Personal property (legally chattel) is property that is portable and can be moved or transported such as clothing, furniture, tools, etc. It is not REAL PROPERTY nor is included in a "real estate" transaction without a common agreement between seller and buyer. A way to legally transfer title to personal property is through a bill-of-sale if the property is significant. Fixtures are personal property that has been attached to real estate or improvements to property and has become part of the real estate and IS included in the real estate transaction, unless specifically excluded in the offer-to-purchase. This includes built-in cabinets, carpet, light fixtures, air conditioning units. etc. Fixtures for businesses (i.e. trade fixtures) in a commercial sale, on the other hand, are considered personal property and should be removed at the end of a lease. If not removed, they become the property of the new owner.

A person who owns all or some of the above-mentioned bundle of rights has an estate in land of which there are two general types: a freehold and a leasehold estate. An owner of a freehold estate owns all six property rights until death or some type of ownership transfer occurs. In a leasehold estate, the owner owns the last four rights but does not have the rights to dispose of or encumber the property (see above). They do enjoy the other four rights for the period of time set forth in the lease after which all rights revert back to the property owner.

Most residential real estate transactions result in the buyer receiving title to the land from the seller/grantor in "fee simple absolute." This means that they own all six of the property rights subject only to the usual government powers, which always supersede individual property owner rights.

There are several ways that a property owner can hold title to real estate.  They are:

  1. Severalty - an owner has exclusive ownership of the property and ability to transfer title. It is not shared with anyone else.
  2. Co-ownership - more than one owner shares ownership or title to the property. They can hold that ownership as either:
    • Tenants-in-Common - owners may not own equal shares of/to the property but they all have equal rights to use/possess the property. In Wisconsin, this type of joint tenancy is presumed unless stated otherwise. Each owner/tenant can pass/sell their ownership interest to someone else unless there is an agreement to the contrary.
    • Joint Tenancy - this is created by either a will stipulating it or a property deed that states it. All owners own property equally and, upon decease of an owner/tenant, the survivorship rights pass to/remain with the other joint tenants without going through probate. However, a joint tenant can sell their ownership interest but the new owner would take ownership as a tenant-in-common.

A "partition suit" is a legal remedy when all parties do not voluntarily agree to sell and dissolve the tenancy.

Under the Wisconson Marital Property Act of January 1, 1986, it is presumed that a couple's property is marital property and subject to equal and joint ownership of both parties UNLESS received as a gift/inheritance, acquired prior to marriage, designated as individual property, or declared by agreement or decree, or other.  Questions regarding marital property should be directed to an attorney.

Other types of ownership include condominium, cooperative, and time-share ownership, each of which has its own peculiar characteristics.



Dean Gunnarson

Dean Gunnarson

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