When purchasing or inheriting real estate in Minnesota, it’s essential to understand the different forms of property ownership. Ownership affects how a property is transferred, taxed, and inherited. Whether you’re a first-time buyer, investor, or estate planner, knowing these distinctions can help you make informed decisions. Below, we break down the various types of ownership and what they mean for you.

Sole Ownership: Holding Property Independently

Sole ownership refers to property owned by a single individual or entity. This form of ownership is legally referred to as an estate in “severalty.” If you are married but own property independently, it remains your sole property unless otherwise designated. Additionally, entities like corporations, limited liability companies (LLCs), partnerships, or trusts can hold ownership in severalty. When a business structure holds property, such as a real estate investment trust (REIT), selling interests may require special licensing, such as a stockbroker license.

Multiple Ownership: Co-Ownership Structures

When two or more people share ownership of a property, they hold an undivided interest, meaning no single owner has a claim to a specific part of the property. All co-owners share equal rights of possession, even if their ownership percentages differ. There are several ways co-owners can structure their ownership:

Tenancy in Common (TIC)

The default form of co-ownership in Minnesota unless otherwise specified.

• Allows for unequal shares of ownership.
• If a co-owner passes away, their ownership interest is inherited by their heirs or devisees rather than the other co-owners.

 Joint Tenancy

Includes the right of survivorship, meaning if one owner dies, their interest automatically transfers to the remaining owners.

• Requires a death certificate to be filed to update ownership records.
• Joint tenancy overrides a will, so the property does not pass to heirs.
• If one co-owner wants to sell but the others do not, they may file a partition lawsuit to force the sale of the property.

Common Interest Ownership: Condominiums and Townhouses

Minnesota’s Common Interest Ownership Act regulates properties where ownership is shared, such as condominiums, townhomes, and cooperatives. These properties are distinct from single-family homes and apartment buildings because they involve shared ownership of common areas.

Condominiums

• Owners have fee simple ownership of their unit and a proportional undivided interest in common areas.
• Common elements include shared spaces like parking lots, pools, and lobbies.
• Limited common elements are designated for exclusive use by one owner, such as balconies, garage stalls, or storage lockers.
• Owners can renovate their interior spaces but cannot change exterior structures or shared mechanical systems.
• Condo owners are required to be members of a Homeowners' Association (HOA), which manages the property and collects dues for maintenance and repairs.

Townhouses

• Similar to condominiums, but each owner also owns the land beneath their unit.
• Townhouse associations function similarly to condo HOAs, handling shared maintenance responsibilities.

Cooperatives

Instead of owning a unit outright, buyers purchase shares in a corporation that owns the building.

• The corporation issues a proprietary lease instead of a deed.
• Members pay monthly dues similar to HOA fees.

Timeshares: Fractional Ownership for Vacation Properties

Timeshares allow individuals to purchase a share in a vacation property, typically for a specific week or set of weeks per year. Owners hold their share as tenants in common and receive a deed to their fractional interest. Annual maintenance fees apply, covering property upkeep and amenities.

Transferring Ownership: Alienation and Closing Documents

The legal process of transferring real estate ownership is called alienation. When you purchase a home in Minnesota, you receive essential documents at closing that confirm your ownership:

• Deed: The official document transferring property ownership.
• Bill of Sale: Transfers any personal property included in the home sale.
• Keys: A simple but symbolic transfer of ownership and access.

Final Thoughts

Understanding the different types of property ownership in Minnesota ensures you choose the best structure for your needs, whether you're purchasing, inheriting, or investing in real estate. Whether you own your home alone, with a spouse, or as part of a community association, the right ownership structure can impact everything from taxation to inheritance and property rights. If you have questions about ownership types or need guidance in buying or selling a home, consulting with a real estate professional can help you make informed decisions.