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 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||The ownership interest is in relation to the partnership||Ownership is a 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 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 Status||The purchaser can only acquire the title of community; cannot acquire a part of it||The purchaser will become a tenant in common with other co-owners in the property||The purchaser will become a tenant in common with the other co-owners in the property||The purchaser can only acquire the whole title||The purchaser may obtain a beneficial interest by assignment or may obtain legal and equitable title from the trust||The purchaser can only acquire whole title of community; cannot acquire a part of it|
|Death||Upon co-owners death, 1/2 belongs to survivor in severalty. 1/2 goes by will to descendants devise 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||Upon co-owners death, his or her interest passes by will to devise 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|
|Successor’s Status||Devisee 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 the trust agreement, generally the successor becomes the beneficiary and trust continues||The 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|