HowshouldItakeownershipofthepropertyIambuying?

ThisimportantquestionisoneCaliforniarealpropertypurchasersasktheirrealestate,escrowand
titleprofessionalseveryday.
Unfortunately,thoughtheseprofessionalsmayidentifythemanymethodsofowningproperty,they
maynotrecommendaspecificformofownership,asdoingsowouldconstitutepracticinglaw.
Becauserealpropertyhasbecomeincreasinglymorevaluable,thequestionofhowpartiestakeown
ershipoftheirpropertyhasgainedgreaterimportance.Theformofownershiptakenalsoreferredtoas
thevestingoftitlewilldeterminewhomaysignvariousdocumentsinvolvingthepropertyandfuture
rightsofthepartiestothetransaction.Theserightsofthepartiestothetransaction.Theserightsin
volvesuchmattersas:realpropertytaxes,incometaxes,inheritanceandgifttaxes,transferabilityof
titleandexposuretocreditorsclaims.Also,howtitleisvestedcanhavesignificantprobateimplications
ineventofdeath.
TheCaliforniaLandTitleAssociation(CLTA)advisesthosepurchasingrealpropertytogivecareful
considerationtothemannerinwhichtitlewillbeheld. Buyersmaywishtoconsultlegalcounselto
determinethemostadvantageousformofownershipfortheirparticularsituation,especiallyin
casesofmultipleownersofasingleproperty.
TheCLTAhasprovidedthefollowingdefinitionsofcommonvestingasaninformationoverview.
Consumersshouldnotrelyontheseaslegaldefinitions.TheAssociationurgesrealpropertypurchasers
tocarefullyconsidertheirtitlingdecisionpriortoclosing,andtoseekcounselshouldtheybeunfamil
iarwiththemostsuitableownershipchoicefortheirparticularsituation.
SOLEOWNERSHIP
Soleownershipmaybedescribedasownershipbyanindividualorotherentitycapableofacquiring
title.Examplesofcommonvestingcasesofsoleownershipare:
1. ASingleMan/Woman
Amanorwomanwhohasnotbeenlegallymarried.Forexample:BruceBuyer,asingleman.
2.AnUnmarriedMan/Woman
Amanorwomanwhopreviouslymarriedandisnowlegallydivorced. Forexample:SallySellers,
anunmarriedwoman.
3. AMarriedMan/WomanasHis/HerSoleandSeparateProperty:
AMarriedmanorwomanwhowishestoacquiretitleinhisorhernamealone.Titlecompanyinsuring
titlewillrequirethespouseofthemarriedmanorwomanacquiringtitletospecificallydisclaimorrelin
quishhisorherright,titleandinteresttotheproperty.Thisestablishesthatitisthedesireofboth
spousesthattitletothepropertybegrantedtoonespouseasthespousessoleandseparateproperty.
Forexample:BruceBuyer,amarriedman,ashissoleandseparateproperty.
COOWNERSHIP
Titletopropertyownedbtwoormorepersonsmaybevestedinthefollowingforms:
1. CommunityProperty:
Aformofvestingtitleto propertyownedbyhusbandandwifeduringtheirmarriagewhichthey
intendtoowntogether.Communitypropertyisdistinguishedfromseparateproperty,whichisproperty
acquiredbeforemarriage,byseparategiftorbequest,afterlegalseparation,orwhichisagreedtobe
ownedbyonespouse.InCalifornia,realpropertyconveyedtoamarriedmanorwomanispresumedto
becommunityproperty,unlessotherwisestated.Sinceallsuchpropertyisownedequally,husbandand
wifemustsignallagreementsanddocumentsoftransfer.Undercommunityproperty,eitherspousehas
therighttodisposeofonehalfofthecommunityproperty,includingtransfersbywill.Forexample:
BruceBuyerandBarbaraBuyer,husbandandwifeascommunityproperty.
2.CommunityPropertywithRightofSurvivorship:
Aformofvestingtitleto realpropertyownedbyhusbandandwifeduringtheirmarriagewhich
theyintendtoowntogether.ThisformofholdingtitlesharesmanyofthecharacteristicsofCommu
nityPropertybutaddsthebenefitoftherightofsurvivorshipsimilartotitleheldinjointtenancy.There
maybetaxbenefitsforholdingtitleinthismanner.InterestmustbecreatedonorafterJuly1,2001.
Onthedeathofaspouse,thedecedentsinterestendsandthesurvivingspouseownsthepropertyby
survivorshipandownsthepropertyinseveralty.Forexample:BruceBuyerandBarbaraBuyer,husband
andwifeascommunitypropertywithrightofsurvivorship.
3.JointTenancy
Aformofvestingtitleto realpropertyownedbytwoormorepersons,whomaynotbemarried,
inequalinterest,subjecttotherightofsurvivorshipinthesurvivingjointtenant(s).Titlemust
havebeenacquiredatthesametime,bythesameconveyance,andthedocumentmustexpresslydeclare
theintentiontocreateajointtenancyestate.Whenajointtenantdies,titletothepropertyisdeclarethe
intentiontocreateajointtenancypropertyisnotsubjecttodispositionbywill.Forexample:Bruce
BuyerandBarbaraBuyer,husbandandwifeasjointtenants.
4.TenancyinCommon:
Aformofvestingtitleto realpropertyownedbyanytwoormoreindividualsinundividedfrac
tionalinterests.Eachpersonsownershipmaybeequalorunequal.
Thesefractionalinterestmaybeunequalinquantityordurationandmayariseasdifferenttimes.
OTHERWAYSOFVESTINGTITLEINCLUDE:
1. ACorporation:
Acorporationisalegalentity,createdunderstatelaw,consistingofoneormoreshareholdersbut
regardedunderstatelawashavinganexistenceandpersonalityseparatefromsuchshareholders.
ThetitlecompanywillrequiredocumentsthatmayincludeCorporateArticles,Bylaws&Resolu
tions.
2.APartnership:
Apartnershipisanassociationtoormorepersonswhocancarryonbusinessforprofitascoworkers,
asgovernedbytheUniformPartnershipAct.Apartnershipmayholdtitletorealpropertyinthename
ofthepartnership.
Thetitlecompanywillrequiredocumentsthatmayincludecorporatearticles,certificateofownership
andPartnershipAgreement.
3.ATrust:
Atrustisanarrangementwherebylegaltitletopropertyistransferredbythegrantortoaperson
calledatrustee,beheldandmanagedbythatpersonforthetrustagreement,calledthebeneficiaries.
ThetitlecompanywillrequiredocumentsthatmayincludeTrustAgreementandTrustCertificate.
4.LimitedLiabilityCompanies(L.L.C.):
Thisformofownershipisalegalentityandissimilartoboththecorporationandthepartnership.
The operatingagreement willdeterminehowtheL.L.C.functionsandistaxed.Likethecorporationits
existenceisseparate.
ThetitlecompanywillrequiredocumentsthatmayincludetheL.L.C.operatingagreementfromits
owners.
Remember:
Howtitleisvestedhasimportantlegalconsequences.Youmaywishtoconsultanattorneytode
terminethemostadvantageousformofownershipforyourparticularsituation.
Parties
Anynumberofpersons.
(canbehusbandandwife)
Anynumberofpersons.
(canbehusbandandwife)
Onlyhusbandandwife. Onlyhusbandandwife
andonlywheninterestis
createdonorafter
July1,2001.
Division
Ownershipcanbedivided
intoanynumberof
interests,equalor
unequal.
Ownershipinterests
cannotbedivided.
Ownershipinterestsare
equal.
Ownershipinterestsare
equal.
Title
Eachcoownerhasa
separatelegaltitletohis
undividedinterest.
Thereisonlyonetitleto
thewholeparty.
Titleinthe
Community.(Similarto
titlebeinginapartner
ship)
Titleinthe
Community.(Similar
totitlebeinginapartner
ship)
Possession
Equalrightofpossession. Equalrightofpossession. Equalrightofpossession. Equalrightofpossession.
Conveyance
Eachcoownersinterest
maybeconveyed
separatelybyitsowner.
Conveyancebyone
coownerwithoutthe
othersbreaksthejoint
tenancy.
Bothcoownersmustjoin
inconveyanceofreal
property.Separateinter
estscannotbeconveyed
Bothcoownersmustjoin
inconveyanceofreal
property.Separateinter
estscannotbeconveyed.
Purchasers
Status
Purchaserbecomesa
tenantincommonwith
theothercoowners.
Purchaserbecomesa
tenantincommonwith
theothercoowners.
Purchasercanonly
acquirewholetitleof
community.Cannot
acquireapartofit.
Purchasercanonly
acquirewholetitleof
community.Cannot
acquireapartofit.
Death
Oncoownersdeath,his
interestpassesbywillto
hisdeviseesorheirs.No
survivorshipright.
Oncoownersdeath,his
interestendsandcannot
bewilled.Survivorowns
thepropertybysurvivor
ship.
Oncoownersdeath,
1/2goestosurvivorin
severalty.Upto1/2goes
bywillorsuccessionto
others.(Consultattorney
withspecificquestions).
Oncoownersdeath,
decedentsinterestends
andcannotbewilled.
Survivorownsthe
propertybysurvivorship.
Successors
Status
Deviseesorheirsbecome
tenantsincommon.
Lastsurvivorowns
propertyinseveralty.
Ifpassingbywill,tenancy
incommonbetween
deviseeandsurvivor
results.
Lastsurvivorowns
propertyinseveralty.
Creditors
Rights
Coownersinterestmay
besoldonexecutionsale
tosatisfyhiscreditor.
Creditorbecomesatenant
incommon.
Coownersinterestmay
besoldonexecutionsale
tosatisfycreditor.Joint
tenancyisbroken,creditor
becomestenantin
common.
Coownersinterest
cannotbeseizedandsold
separately.Thewhole
propertymaybesoldto
satisfydebtsofeither
husbandorwifedepend
ingonthedebt.(Consult
attorneywithspecific
questions).
Coownersinterest
cannotbeseizedandsold
separately.Thewhole
propertymaybesoldto
satisfydebtsofeither
husbandorwifedepend
ingonthedebt.(Consult
attorneywithspecific
questions).
Presumption
Favoredindoubtfulcases
excepthusbandandwife.
(Seecommunity
property).
Mustbeexpresslystated
andproperlyformed.Not
favored.
Strongpresumptionthat
propertyacquiredby
husbandandwifeis
community.
Strongpresumptionthat
propertyacquiredby
husbandandwifeis
community.
TENANCY IN COMMON JOINT TENANCY
COMMUNITY
PROPERTY
COMMUNITY
PROPERTY WITH RIGHT
OF SURVIVORSHIP
THISISPROVIDEDFORINFORMATIONALPURPOSESONLY.SPECIFICQUESTIONSFORACTUAL
REALPROPERTYTRANSACTIONSSHOULDBEDIRECTEDTOYOURATTORNEYORC.P.A.