You have found your perfect home, won the bidding war for said home, and completed all inspections and removed all contingencies (if there are any). You are in the home stretch, though one large decision still looms – how to hold title for this real property.There are multiple ways in which to hold real property in California which determines who may sign various property documents as well as future rights of the parties to the property transaction. Because these rights involve things such as real property taxes, income taxes, inheritance and gift taxes, transferability of title, exposure to creditor’s claims and can have significant probate implications in the event of death, please take the time to understand the implications of each method and consult legal counsel to determine the most advantageous form of ownership for your particular situation.
Here is a list summarizing common ways to hold title:
Sole Ownership is described as ownership by an individual or other entity capable of acquiring title. Common cases of sole ownership are: A Single Man or Woman; A Married Man or Woman as His or Her Sole and Separate Property; and A Registered Domestic Partner as His or Her Sole and Separate Property. The title company insuring title will require the spouse or domestic partner of the person acquiring title to specifically disclaim or relinquish his or her right, title and interest to the property through a Quit Claim Deed. This establishes that both parties want title granted only to one person as their sole and separate property.
Co-Ownership occurs when two or more persons hold title to a specific property. There are several ways as described below:
Community Property is owned together by a husband and wife or by registered domestic partners. All such property is owned equally, so both parties must sign all agreements and documents pertaining to the transfer of this property and any loans. Each owner has the right to dispose of her/her half of the property, by will. In California, all real property conveyed to a married person, or registered domestic partner, is presumed community property unless specifically stated otherwise.
Community Property with Right of Survivorship shares many of the characteristics of community property with the added benefit of the right of survivorship. Upon the death of any owner, the decedent’s interest ends and the survivor owns the entire property. Holding title this way may offer tax benefits.
Joint Tenancy is a form of title for property owned by two or more persons, who may or may not be married or registered domestic partners. Each owner has an equal interest in the property and the right of survivorship applies to the surviving joint tenant(s). All joint tenants must acquire title at the same time by the same conveyance, and it must expressly state the intention to create a joint tenancy estate.
Tenancy in Common is a title to property owned by any two or more individuals in undivided fractional interest which may be unequal in quantity or duration, and may arise at different times. Each tenant in common owns a share of the property, is entitled to a comparable portion of income from the property, and must bear an equivalent share of expenses. Each tenant in common may sell, lease or will his/her heir that share of the property belonging to him/her. The division of interest will be recorded on the title.
Another common way of holding title is as Trustees of a Trust. In this arrangement, legal title to the property is transferred by the grantor to a person called a trustee, who then holds and manages the trust for the benefit of the people specified in the trust agreement, called beneficiaries.
Please remember that how title is held has many important legal consequences. Consulting legal counsel is the best way to ensure you are holding title in the most advantageous way for your particular situation.