Different Ways in Which Property Can be Owned by Individuals
Common Types of Ownership (by Individuals)
Sole owner: An undivided ownership interest by one person with no other party having a right or interest in or to the Property
Tenants by the Entireties (this type of ownership is only available to couples who are married at the time of the deed signing): An undivided ownership by both husband and wife, with the right to the entire property passing to the surviving spouse upon the death of one spouse. Pennsylvania law provides, generally, that an individual’s creditors cannot pursue assets jointly owned by that individual and their spouse as tenants by the entireties.
Joint Tenants With Right of Survivorship: An equal ownership interest by all parties named on the deed with rights of ownership vesting in the survivor of all owners…
Owning the property as Joint Tenants With Rights of Survivorship means that the death of one joint tenant will result in the deceased’s interest in the property passing automatically to the surviving joint tenant(s). The last living joint tenant becomes the sole owner of the property and may include the property in their will / bequeath ownership to their heirs. During a joint tenancy, none of the joint tenants can individually mortgage or sell their interest in the property. As such, if you want to sell property owned by joint tenancy, all of the joint tenants would need to agree and sign the deed. Property owned by joint tenants are also subject to the claims of creditors of any of the tenants. This means that if you or any of the other joint tenants were sued, the house could be subject to the creditor’s judgment. This can also be an issue if one of the joint tenants goes through a divorce, in which case that person’s interest in the house would be part of what is divided up as part of the divorce proceeding.
Tenants in Common: An individual ownership interest in a portion of the Property, either equal or unequal with another party, and sharing a common interest and right to use as to the whole. There exists no right of survivorship in a tenancy in common. Upon the death of a co-tenant, his or her share passes to his or her estate. Each co-tenant may encumber or dispose of his or her own share at will. If a tenant dies without having disposed of their interest in a will, that interest will be distributed pursuant to relevant intestacy laws. Again, real issues can arise if one of the owners of the property has a creditor or goes through a divorce.
Here, because you and your spouse currently own the property as tenants by the entireties, you have significant protection from creditors and the house will automatically pass to the survivor of the two of you upon the death of the other.
If you want to add your grandchild to the deed, you could either add them as a joint tenant (meaning they would become sole owner of the property upon the death of you and your spouse, assuming they survived you) or as a tenant in common (meaning you and your spouse together would own a portion (perhaps ½)of the property, and your grandchild would own the remainder).
The primary downsides of adding your grandchild to your deed as joint tenant with the right of survivorship or a tenant in common are: (1) in the event your grandchild were sued for anything, had other debts, or went through a divorce, someone could seek to recover their interest in the house; and (2) [for joint tenancy] If you and/or your spouse needed to sell the property, you would need your grandchild to agree and sign the deed or [for tenants in common] you would have no control over who your grandchild sells or wills their ½ interest in the house to.