Since real property is arguably the most valuable asset you will own in your lifetime, it is important to understand exactly how you hold title to your property.
The way that you hold the title, or rather, how you are vested, determines everything that you can do with your property in your lifetime and after.
That’s a big statement.
Broken down, it means that the form of vesting will determine who can sign documents such as real property taxes, income taxes, inheritance and gift taxes, transferability of title and exposure to creditor’s claims.
Vesting and probate
The way that a property is vested also has implications for whether or not a probate will be needed after death.
The California Land Title Association recommends buyers carefully consider how their title will be vested when it comes time to purchase.
As your trusted real estate agent, it should be important to note that I can not recommend a specific form of ownership, since that would constitute practicing law. For legal or tax advice, it is recommended to consult with an attorney and/or your tax advisor.
I can, however, identify the many methods of owning property for informational purposes, and I am here to help you answer a vital question: How are you vested?
Two common ways of holding titles
Let’s take a look at the two common ways of holding titles — sole ownership and co-ownership.
With sole ownership, an individual can acquire a title in his or her name whether in a relationship or not. These are the three qualifiers of sole ownership:
- A single individual who is not legally married or in a partnership.
- A married individual who desires title in his or her own name (with relinquishment from the spouse).
- A domestic partner who desires title in his or her own name (again with relinquishment from the spouse).
With co-ownership, there are a few ways that a property may be vested under the names of two or more people.
- Community property: Unless otherwise stated, property owned by married couples and partners is assumed to be considered community property. Here, the property is owned equally between the parties and all important documents are signed together.
- Community property with right of survivorship: this form of vesting is exactly the same as a community property with one distinction—after the death of an owner, the interest passes to the surviving owner, granting them ownership of all interests in the property.
- Joint Tenancy: A joint tenancy gives equal rights and ownership to all parties, and upon the co-owner’s death, the survivor’s interest cannot be disposed of by will.
- Tenancy in Common: The ownership in this form of vesting can be divided up into any number of interests, equal or unequal. Each tenant owns a share of the property and is entitled to a portion of the income from the property.
In addition to sole ownership and co-ownership, a property title may be vested by a corporation, a partnership, trustees of a trust and LLC’s.
Providing key details on ownership
As always, I am here to provide you with educational pieces to keep you informed about key details concerning property ownership.
Don’t hesitate to reach out at 619-568-0568 or info@simonerealestategroup.com if you have any questions, or if you have educational topics you would like to be discussed in the future.
I am always here to help answer any questions and keep you in the loop on the world of real estate.
-Corey
