Mortgage Vesting

When you sign your mortgage agreement, pay attention to how you choose to title your property. Certain rights are assumed if you do not explicitly state the contrary. For example, when a couple purchases a home, joint ownership is assumed in most states. This means that you must remain the owner of the house until you die or the other owner agrees to allow you to convey your ownership.

The term vesting refers to the details of the actual ownership of property, including how the property is owned. The mortgage documents itemize each owner's vestment in the property. The vesting rights, conveyed by virtue of a mortgage deed, typically include rights to use and occupy the premises. You relinquish temporary legal estate of the property for the duration of the mortgage, but you retain the right to redeem the property when you pay off the mortgage and thus retain actual ownership of the mortgaged property.

Individuals hold title or ownership in a property as single owners or jointly with other owners and the vested interest in the property is determined by the ownership agreement. Typically, joint property owners share survivor rights. If two individuals hold equal vesting rights, for example, when one owner passes away, the other person gets sole ownership of the property. Even if you are married, you can mortgage your property as a "sole and separate" owner. In this case, in most states your spouse must sign an affidavit pledging no claim to the property. Conversely, you can mortgage your property as a single owner; the discretion is yours if you wish to add another person, such as your live-in partner, as a joint owner on your mortgage documents.

Joint ownership can occur in several forms including joint tenancy and tenancy in common, and each ownership type affects vesting rights. A typical category of joint tenancy occurs when a husband and wife are equal owners of a mortgaged home. Vesting is held jointly by each spouse, and if one dies the other retains sole ownership of the home. If you own property under a tenancy in common agreement, you and your co-owners have equal rights to use the property but can have unequal vested interest. Each tenancy in common owner can sell or pass on his vested portion of the property to others.

Tenancy by the entirety is another form of joint ownership but it is reserved for married couples. As in a joint tenancy, each spouse shares equal vested interest in the property. Unlike a joint tenancy, however, neither spouse can convey ownership rights without the consent of the other. Further, you can dissolve a tenancy by the entirety through divorce, annulment or death only. Conversely, a tenancy by severalty means that you are the sole owner and, aside from your mortgage provider, no one but you has vested interest in your property.