What are the different ways to hold title to a property, and does it really matter?
Deciding how to hold title to a property is very important and more than just a simple decision. Make sure you understand it or seek professional help if you’re not sure how to do it properly. How your property is titled can have consequences for your heirs and your estate plan, as well as many other tax and legal ramifications, so It’s a decision you need to carefully consider.
California allows many ways of titling property, such as these more common ones: tenancy in common, joint tenancy, tenants by the entirety, community property, and sole ownership.
Other, less common kinds of property ownership are partnership ownership, corporate ownership, and trust ownership.
Here are the descriptions of the most common types of ownership:
Sole ownership
A single woman or man.
A woman or man who is not legally married
For example, John Doe, a single man
An unmarried woman or man
A woman or man who, having been married, is now legally divorced
A married woman or man, as her or his separate and sole property. When a married woman or man wants to acquire title in her or his name alone, the husband or wife must consent to transfer, by quitclaim deed or otherwise, thereby giving up all title, right, and interest in the property.
Community Property
Community property is a property acquired by wife and husband, or by either. Real property conveyed to a married woman or man is presumed to be community property. In this case, both husband and wife have the right to dispose of one half of the property.
Joint Tenancy
The main characteristic of joint tenancy is the right of survivorship. When one tenant dies, the title to the joint property immediately goes to the surviving joint tenant(s).
Tenancy in Common
With tenancy in common (TIC), two or more individuals hold title to real estate together, with equal rights to enjoy their property during their lives. How is it different from joint tenancy? Tenants in common hold title individually for their part and can encumber it or dispose of it at will. This kind of title can be entered into at any time - even many years after the individuals entered into an agreement. Ownership can be transferred to other parties, and in the case of death, ownership transfers to their owner's heirs undivided.
Community Property With Right of Survivorship (only applicable in some states)
This type of community property combines characteristics from both community property and joint tenancy. In community property with the right of survivorship, after the death of one spouse, the survivor gets the deceased’s share of the property. The property should automatically pass to the surviving spouse.
Keep in mind that there are important legal and tax consequences on how you hold the title. You should contact a lawyer and/or an accountant and ask for individual advice on how you should vest your title in your particular case.
Do you need help vesting the right title? For more information, you can reach us at info@cbi-commercial.com