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Picking The Best Way to Hold Title to Your Home

Most home buyers are not fully aware of the different ways they can hold title to a home. Specific advice – for instance, should you, as a married couple in SoCal take title as Community Property or Joint Tenants – depends greatly on your circumstances and plans, and is the realm of attorneys and tax accountants.

But for the sake of keeping you informed, here are some of the most common ways to hold title to real estate and their pro's and cons:



1. Single Ownership


Whether you are single or married, you may hold title to your property under single ownership. The legal name of this vesting is called ownership in severalty.


Choosing whether or not to do so depends on your very own individual situation. You might be asking yourself, why would a married couple hold title to their property in such way? One example, is if you invest in properties but your spouse is not involved with the investments at all, this would help separate your spouse from having their name on title. Keeping business, business!


Any special tax or other advantages of holding title in sole ownership? None. Moreover, If the sole owner passes away, any real estate held this way is subject to the probate court process, which can be a dreadful process.


If you are married and considering holding title as your Sole and Separate Property, remember that California is a Community Property state. This means that Community Property is the assumed vesting for any married person. If you wish to hold title as your Sole and Separate Property, your spouse must explicitly relinquish their community property interest to you by a recorded deed.


2. Tenants in Common

This is a very common method real estate investors and 2nd marriages take title to property, aside from starting up an LLC and taking title that way (that's another subject).


This method allows the investors to calculate and decide what percentage of ownership goes to each individual owner, this often depends on the amount of money the investor puts down on the asset as well as their interpersonal agreements regarding the scope of work and services each investor is set to provide.


One other advantage of this vesting is that an owner can sell or pass his individual interest to someone else, at will, without approval from their co-owners. The remaining tenant in common could wind up co-owning property with a stranger, and to top that off, a tenant in common can bring a partition lawsuit to force a property sale if the other co-owners are unwilling to sell. The court can then order sale, and the proceeds will be split among the co-owners according to their individual ownership shares.


When it comes to second marriages, this vesting method is a popular option too so each spouse can will their individual share to their children from a first marriage, for example.


Any share in a Tenancy in Common can be held in severalty, joint tenancy, or community property. Therefore, two married couples can own defined shares through Tenancy in Common, each as their own community property.



3. Community Property (and Community Property with Right of Survivorship)

This is the presumed vesting for married couples in the State of California – unless stated otherwise, property held by married couples is considered community property. The spouse share ownership rights over the property equally, and both must join in any conveyance or encumbrance. Community Property is a vesting that is only available to married couples.


Community Property can be held with or without “Right of Survivorship.” If Right of Survivorship is stated, upon the death of one spouse, the surviving spouse automatically holds the entire property in severalty – sometimes with tax benefits. If not, a decedent’s interest will pass into his or her estate. When this is the case, it is subject to the court proceeding known as probate.


4. Joint Tenancy

Like community property, joint tenants hold perfectly equal ownership rights to their property. Unlike community property, it is not restricted only to married couples. Any number of owners can hold title in joint tenancy, and they do not need to be related. The right of survivorship is built in to joint tenancy – upon the death of one joint tenant, their interest passes automatically to the remaining joint tenant(s).


It is possible for one or more joint tenants to break the joint tenancy by selling their interest. Title to the property would then be held by the remaining joint tenants and the new buyers as tenants in common.

5. Revocable Living Trust

A living trust is a legal entity which can hold various assets, including title to real property. A trust is formed with the help of an attorney – usually costing only about $1,000 – and contains very specific instructions as to who has rights to property in the trust (the trustees) and what to do if any of the trustees pass away or become incapacitated. Property in a trust can be held by one or more trustees. The trust can stipulate that a decedent’s interest will automatically pass to his or her co-trustees, and set up successor trustees to receive title if all trustees on title pass away or become incapacitated. For this reason, inheritance of a property held in a trust does not typically require probate.

This article was written in collaboration with Will Grey, Account Executive with WFG Title Company. He is our preferred, go-to Title expert and he can be reached at (949) 280-8171 | will4title@gmail.com