Determining How To Take Title to your home Is Critical

Determining how to take title to your home is critical. It should be a major decision for you when it comes time to sign your loan documents at an Escrow company, if you have never owned property before.  Your escrow officer will ask “How do you want to hold title?” but she cannot 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 to 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 through 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 mostly in Northern California)

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

6. Tenancy in Partnership (used in business situations)

Community PropertyJoint TenancyTenancy in CommonTenancy in PartnershipTitle Holding TrustCommunity Property Right of Survivorship
PartiesOnly husband   & wifeAny number of persons-can be husband & wifeTwo or more persons or entitiesOnly partners (any number)Individuals or groups-partnerships or corporationsOnly husband & wife
DivisionOwnership & managerial interests are equalJoint tenants have one of the same interestOwnership can be divided into equal or unequal interestsThe ownership interest is in relation to the partnershipOwnership is a personal property interest-can be divided into # of interestsOwnership and managerial interests are equal
TitleTitle is in the community-each interest is equalOnly one title to the entire propertyEach co-owner has a separate legal title to his or her undivided interestTitle is in the partnershipLegal and equitable title is held by the trusteeTitle is in the community Each interest is separate
PossessionBoth co-owners have equal possessionEqual right of possessionEach co-owner has a separate legal title to his or her undivided interestEqual right of possession but only for partnership propertyRight of possession as specified in the trust provisionBoth co-owners have equal possession
ConveyanceReal property requires written consent of the other spouse & with separate interest cannot be conveyed except upon deathConveyance by one co-owner without the other breaks his or her joint tenancyEach co-owners interest may be conveyed separately by its ownerAny authorized partner may convey whole partnership property fro partnership purposesDesignated parties within the trust agreement authorize the trustee to convey property. A beneficiary’s 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
Purchaser’s StatusThe purchaser can only acquire the title of community; cannot acquire a part of itThe purchaser will become a tenant in common with other co-owners in the propertyThe purchaser will become a tenant in common with the other co-owners in the propertyThe purchaser can only acquire the whole titleThe purchaser may obtain a beneficial interest by assignment or may obtain legal and equitable title from the trustThe purchaser can only acquire whole title of community; cannot acquire a part of it
DeathUpon co-owners death, 1/2 belongs to survivor in severalty. 1/2 goes by will to descendants devise or by succession to survivorOn co-owners death the entire tenancy remains to the survivor. This right of survivorship is the primary incident of joint tenancyUpon co-owners death, his or her interest passes by will to devise or heirs. No survivorship rightOn 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 estateSuccessor beneficiaries may be named in the trust agreement, eliminating the need for probateOn co-owners death the entire tenancy remains to the survivor. Subject to the same procedures as property held in joint tenancy
Successor’s StatusDevisee or heirs become tenants in commonLast survivor owns property in severaltyDevisee or heirs become tenants in commonHeirs or divsees have rights in partnership interest but not in specific propertyDefined by the trust agreement, generally the successor becomes the beneficiary and trust continuesThe surviving spouse owns property
Creditors RightsCo-owners interest may be sold on execution sale to his or her creditor. Creditor becomes tenant in commonCo-owners interest may be sold on execution sale to satisfy creditor. Joint tenancy is broken and creditor becomes tenant in commonCo-owners interest may be sold on execution sale tohis or her creditor. Creditor becomes a tenant in commonPartners’ 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 creditorCreditor 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 distributedProperty 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
PresumptionStrong presumption that property acquired by husband and wife is communityMust be expressly statedFavored in doubtful cases except husband and wife cased interestArise only by virtue of partnership status in property placed in partnershipA trust is expressly created by an executed trust agreementMust be expressly stated

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