Title is the concept we use in real estate to define the actual ownership rights that someone has to a property.
California offers different options for title ownership, each of which has significant and different tax and legal consequences. Before you close, you should determine which form of title will be optimal for you and those closest to you. Here’s our quick guide to each form of holding title in California.
Download our quick guide to holding title and property ownership in CA.
SOLE OWNERSHIP
Sole ownership indicates that title is held by one person. That person could be any of the following:
Single Man/Woman.
This is a man or woman who is not legally married.
Unmarried Man/Woman.
Unlike a “single” person, an “unmarried” person is legally divorced, or part of a domestic partnership that has been legally dissolved.
Married Spouse or Domestic Partner, taking title as “Sole and Separate Property.”
Couples who are married or in a domestic partnership can purchase a property, without sharing the title with their spouse or partner. In California, if a married man or woman wants to acquire a title in their name alone, the spouse or partner must indicate their legal consent. Typically, this is done by a quitclaim deed or other document, which relinquishes all right, title, and interest in the property.
Download our quick guide to holding title and property ownership in CA.
CO-OWNERSHIP
Co-ownership is when title is held by two or more people, including couples, a group of investors, and groups of siblings or other family members. Co-ownerships in California may conform to any of the below scenarios.
Community Property
Since California is a community property state, married couples or registered domestic partners are treated as a single economic unit. According to the California Civil Code, unless the couple declares another form of holding title, all title acquired during the course of the marriage qualifies as community property, by default. When there’s no “right of survivorship,” either spouse may dispose of their half of the property. If a husband bequeaths his half to someone other than his wife, when he dies, his half is subject to probate. If the husband does not exercise this right, his half automatically goes to his wife. These same rights apply to registered domestic partners, too.
Community Property with Right of Survivorship
Another form of community property ownership includes what’s called a “right of survivorship.” What this means is when one of the spouses/partners dies, the surviving spouse automatically receives the deceased spouse or partner’s share. Under right of survivorship, only the surviving spouse can receive this interest: it can’t be passed on to any other heir or designee.
Joint Tenancy
Joint tenancy, which occurs when two or more people equally share title, has a built-in right of survivorship. When one of the joint tenants dies, the title immediately vests to the surviving joint tenants. As with community property, joint tenancy property is not subject to disposition by will.
If a joint tenancy looks on the surface to be the same as community property with the right of survivorship, beware: they’re not. The tax code treats these differently when it comes to capital gains.
Tenancy-in-Common
Although tenancy-in-common and joint tenancy sound alike, they are actually quite different. The first difference is that the shares do not need to be equal. With tenancy-in-common, one partner can hold a three-quarter interest, whereas another might hold a 10 percent interest, and a third the remainder (15 percent).The second difference is that there is no right of survivorship. When a partner dies, the interest vests to that partner’s heirs or other designees, not to the other tenants. And there’s another difference, with tenancy-in-common, you can also sell your shares at any time
At Escrow of the West, our role is to help you navigate title and deed documentation, and make sure all your paperwork is timely and accurate. We can’t advise on what form of holding title is best for your circumstance. But we can make sure that the option you pick is handled correctly. Because of our level of service and attention to detail, we are one of the leading Escrow providers for homeowners and real estate professionals across Southern California.
To meet our team of Escrow officers, visit one of our offices or call 866-444-5560 to speak to a representative.
