Common Methods of Holding Title
Ways to Hold Title in California
This important question is one California real property purchasers
ask their real estate, escrow and title professionals every day.
Unfortunately, though these professionals may identify the many
methods of owning property, they may not recommend a specific form of ownership, as doing so would constitute practicing law.
Because real property is among the most valuable of assets, the
question of how parties take ownership of their property is of great importance. The form of ownership taken—the vesting of title—will determine who may sign various documents involving the property and future rights of the parties to the transaction. These rights involve such matters as: real property taxes, income taxes, inheritance and gift taxes, transfer-ability of title and exposure to creditor’s claims. Also, how title is vested can have significant probate implications in the event of death.
The California Land Title Association (CLTA) advises those purchasing real property to give careful consideration to the manner in which title will be held. Buyers may wish to consult legal counsel to determine the most advantageous form of ownership for their particular situation, especially in cases of multiple owners of a single property.
The CLTA has provided the following definitions of common vestings as an informational overview only. Consumers should not rely on these as legal definitions. The Association urges real property purchasers to carefully consider their titling decision prior to closing, and to seek counsel should they be unfamiliar with the most suitable ownership choice for their particular situation.
Under current law, California recognizes same sex relationships
that are legally performed or entered into in California and in other states and other countries. This recognition includes same sex
marriages and other types of legal unions that are similar to registered domestic partnership status.
Although this Series will use the title “registered domestic partner”
in examples, the term “domestic partnership” will be used to include
both California registered domestic partnerships and all non-marital
legal unions that are recognized in California (i.e. Civil Unions, etc.).
Sole Ownership may be described as ownership by an individual or other entity capable of acquiring title. Examples of common vesting cases of sole ownership are:
- A Single Man or Woman, an Unmarried Man or Woman or a Widow or Widower: A man or woman who is not legally married or in a domestic partnership. For example: Bruce Buyer, a single man.
- A Married Man or Woman as His or Her Sole and Separate Property: A married man or woman who wishes to acquire title in his or her name alone.
The title company insuring title will require the spouse of the married man or woman acquiring title to specifically disclaim or relinquish his or her right, title and interest to the property. This establishes that both spouses want title to the property to be granted to one spouse as that spouse’s sole and separate property. The same rules will apply for same sex married couples. For example: Bruce Buyer, a married man, as his sole and separate property.
- A Domestic Partner as His or Her Sole and Separate Property: A domestic partner who wishes to acquire title in his or her name alone.
The title company insuring title will require the domestic partner of the person acquiring title to specifically disclaim or relinquish his or her right, title and interest to the property. This establishes that both domestic partners want title to the property to be granted to one partner as that person’s sole and separate property. For example: Bruce Buyer, a registered domestic partner, as his sole and separate property
Title to property owned by two or more persons may be vested in the following forms:
1. Community Property:
A Form of vesting title to property owned together by married persons or be domestic partners. Community property is distinguished from separate property, which is property required before marriage or before a domestic partnership by separate gift or bequest, after legal separation, or which is agreed in writing to be owned by one spouse or domestic partner.
In California, real property conveyed to a married person, or to a domestic partner is presumed to be community property, unless otherwise stated (i.e. property acquired as separate property by gift, bequest or agreement). Since all such property is owned equally, both parties must sign all agreements and documents transferring the property or using it as security for a loan. Each owner has the right to dispose of his/her one half of the community property by will.
2. Community Property with Right of Survivor-ship:
A form of vesting title to property owned together by spouses or by domestic partners. This form of holding title shares many of the characteristics of community property but adds the benefit of the right of survivor ship similar to title held in joint tenancy. There may be tax benefits for holding title in the manner. On the death of an owner, the decedent's interest ends and the survivor owns all interests in the property.
3. Joint Tenancy:
A form of vesting title to property owned by two or more persons, who may or may not be married or domestic partners, in equal interests, subject to the right of survivor-ship in the surviving joint tenant(s). Title must have been acquired at the same time, by the same conveyance, and the document must expressly declare the intention to create a joint tenancy estate. When a joint tenant dies, title to the property is automatically conveyed by operation of law to the surviving joint tenant(s). Therefore, joint tenancy property is not subject to disposition by will.
Note: If a married person enters into a joint tenancy that does not include their spouse, the title company insuring title may require the spouse of the married man or woman acquiring title to specifically consent to the joint tenancy. The same rules will apply for same sex married couples and domestic partners.
4. Tenancy in Common:
A form of vesting title to property owned by any two or more individuals in undivided fractional interests. These fractional interests may be unequal in quantity or duration and may arise at different times. Each tenant in common owns a share of the property, is entitled to a comparable portion of the income from the property and must bear an equivalent share of expenses. Each co-tenant may sell, lease or will his/her heir that share of the property belonging to him/her.