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Determining How To Take Title to your home isn’t easy

Determining how to take title to your home isn’t easy. It could be a major decision for you when it comes time to sign your loan documents at an Escrow company.  Your escrow officer will ask “How do you want to hold title?” but she can not help you with the answer.  It’s a simple question with multiple answers and most people don’t know what to say, or what each means. You should know what you want to do before you sign your documents. If you pick wrong it could have terrible consequences should something happen to you.  Luckily, what you pick can be changed if you picked wrong. Wouldn’t it be better to go the the settlement table with an idea of what you want to do in advance?  Yes!

There are six ways one can have an ownership stake.  California is a community property state, where a married couple owns everything equally unless it is something brought into the marriage as separate property, an inheritance, or they have a pre-nuptial agreement stipulating other arrangements.

Understanding how to hold title to your real estate is very important.  Take a few minutes to read throught this chart now and you will be prepared when you sign all of your documents at the closing of your new home.  If you are confused about what is best for you, talk to your lawyer or accountant. Not only can’t your Escrow Officer suggest anything, your Realtor really isn’t supposed to do it either.

The most common choices for holding title for individuals or couples

1.Community Property

2. Joint Tenancy

3. Community Property Right of Survivorship.

4.Tenancy in Common (used most with TICs)

5. Title Hold Trust (used when you have a trust)

6. Tenancy in Partnership (used in business situation)

Community Property Joint Tenancy Tenancy in Common Tenancy in Partnership Title Holding Trust Community Property Right of Survivorship
Parties Only husband   & wife Any number of persons-can be husband & wife Two or more persons or entities Only partners (any number) Individuals or groups-partnerships or corporations Only husband & wife
Division Ownership & managerial interests are equal Joint tenants have one of the same interest Ownership can be divided into equal or unequal interests Ownership interest is in relation to the partnership Ownership is personal property interest-can be divided into # of interests Ownership and managerial interests are equal
Title Title is in the community-each interest is equal Only one title to the entire property Each co-owner has a separate legal title to his or her undivided interest Title is in the partnership Legal and equitable title is held by the trustee Title is in the community Each interest is separate
Possession Both co-owners have equal possession Equal right of possession Each co-owner has a separate legal title to his or her undivided interest Equal right of possession but only for partnership property Right of possession as specified in the trust provision Both co-owners have equal possession
Conveyance Real property requires written consent of the other spouse & with separate interest cannot be conveyed except upon death Conveyance by one co-owner without the other breaks his or her joint tenancy Each co-owners interest may be conveyed separately by its owner Any authorized partner may convey whole partnership property fro partnership purposes Designated parties within the trust agreement authorize the trustee to convey property. A beneficiarys interest in the trust may be transferred. Real property requires written consent of other spouse, an with separate interest cannot be conveyed except upon death
Purchasers Status Purchaser can only acquire title of community; cannot acquire a part of it Purchaser will become a tenant in common with other co-owners in the property Purchaser will become a tenant in common with the other co-owners in the property Purchaser can only acquire the whole title Purchaser may obtain a beneficial interest by assignment or may obtain legal and equitable title from the trust Purchaser can only acquire whole title of community; cannot acquire a part of it
Death On co-owners death, 1/2 belongs to survivor in severalty. 1/2 goes by will to descendants devisee or by succession to survivor On co-owners death the entire tenancy remains to the survivor. This right of survivorship is the primary incident of joint tenancy On co-owners death his or her interest passes by will to devisee or heirs. No survivorship right On partners death his or her partnership interest passes to the surviving partner(s) pending liquidation of the partnership. Share of deceased partner then goes to his or her estate Successor beneficiaries may be named in the trust agreement, eliminating the need for probate On co-owners death the entire tenancy remains to the survivor. Subject to the same procedures as property held in joint tenancy
Successors Status Devisees or heirs become tenants in common Last survivor owns property in severalty Devisee or heirs become tenants in common Heirs or divsees have rights in partnership interest but not in specific property Defined by trust agreement, generally the successor becomes the beneficiary and trust continues Surviving spouse owns property
Creditors Rights Co-owners interest may be sold on execution sale to his or her creditor. Creditor becomes tenant in common Co-owners interest may be sold on execution sale to satisfy creditor. Joint tenancy is broken and creditor becomes tenant in common Co-owners interest may be sold on execution sale tohis or her creditor. Creditor becomes a tenant in common Partners interest may not be seized or sold separately by his or her personal creditor but his or her share of profits may be obtained by a personal creditor. Whole property may be sold on execution sale to satisfy partnership creditor Creditor may seek an order for execution sale of the beneficial interest or may seek an order that the trust estate be liquidated and the proceeds distributed Property of community is liable for debts of either which are made before or after marriage; whole property may be sold on execution sale to satisfy creditor
Presumption Strong presumption that property acquired by husband and wife is community Must be expressly stated Favored in doubtful cases except husband and wife cased interest Arise only by virtue of partnership status in property placed in partnership A trust is expressly created by an executed trust agreement Must be expressly stated

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