Real Estate Closing

The "closing" is the final step in obtaining your home or mortgage. For the appraisal, credit assessment, public records updates and legal documents work there will be closing costs. Whatever your costs will be, you will be told before the loan is consummated. Home loans are covered by the federal Truth-In-Lending Act, which requires that the lender make full disclosure to the borrower of all costs, fees or other charges growing out of the transaction before the loan is consummated.

Common Ways for Title to be Held in Minnesota

Individually: Land can be owned by an individual person or as a corporation.

Joint Tenancy With Right of Survivorship: One way for multiple people to hold title to a single piece of real estate is as joint tenants with right of survivorship. With this type of ownership, each individual owns an undivided equal interest in the property. For example, if two people own the property, each would own 50% interest and both would have the right to use the entire piece of property. The distinguishing characteristic of a joint tenancy is that when one joint tenant dies, his or her interest in the property automatically transfers to the surviving joint tenant(s). This transfer occurs outside of the probate system and will occur even if the deceased joint tenant has a provision to the contrary in his or her will.

Tenancy in Common: Another way for multiple people to hold title to a single piece of real estate is as tenants in common. This type of ownership also involves multiple undivided interests. However, the interests are not required to be equal. It is possible for one party to own a 50% interest, one party to own a 30% interest and one party to own a 20% interest, for instance. In a tenancy in common, when an owner dies, his or her interest will be transferred through the probate process. It is therefore possible for his or her interest in the real estate to be transferred to someone other than the existing tenants in common.

Trusts: A trust is a legal entity set up by one or more individuals as part of estate or tax planning.

Life Estate: A less common method of real estate ownership is a life estate. In a life estate, two or more parties own an interest in real estate but not all of the parties have a present right to possess and use it. One party (or parties), called the life tenant, has the right to use the property during his or her life. The other party (or parties), called the remainderman, does not have a right to use the property until the life tenant dies. At that point, the remainderman gains a possession of the property. Joint tenancies and life estates are occasionally used in estate plans as probated avoidance techniques.

Note: Married couples can own property as either joint tenants with rights of survivorship or tenants in common. If a married couple gets divorced, it is very important that their family law attorneys handle the division and transfer of their real estate appropriately. If their attorneys are not familiar with real estate law, they should consult a real estate attorney.