This question is one San Jose CA 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 has become increasingly more valuable,
the question of how parties take ownership of their property
has gained greater 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, transferability of title and exposure
to creditor's claims. Also, how title is vested can have
significant probate implications in the event of death.
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 following definitions are a few common ways to vest
title. These definitions are provided as an informational
overview. Consumers should not rely on these legal definitions.
Real property purchasers are urged 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.
Sole Ownership
Sole ownership may be described as ownership by an individual
or other entity capable of acquiring title. Examples of
common ways to vest in cases of sole ownership are:
1. A Single Man/Woman - A man or a woman who has not been
legally married. For example: Robert Buyer, a single man.
2. An Unmarried Man/Woman - A man or woman who was previously
married and is now legally divorced. For example: Sharon
Seller, an unmarried woman.
3. A Married Man/Woman as His/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 it is the desire of both spouses that title to the
property is granted to one spouse as that spouse's sole
and separate property. For example: Robert Buyer, a married
man, as his sole and separate property.
Co-Ownership
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 by husband and wife during their marriage which
they intend to own together. Community property is distinguished
from separate property, which is property acquired before
marriage, by separate gift or bequest, after legal separation,
or which is agreed to be owned by one spouse. In California,
real property conveyed to a married man or woman is presumed
to be community property, unless otherwise stated. Since
all such property is owned equally, husband and wife must
sign all agreements and documents of transfer. Under community
property, either spouse has the right to dispose of one
half of the community property, including transfers by
will. For example: Robert Buyer and Brenda Buyer, husband
and wife as community property.
2. Community Property with Right of Survivorship - A form
of vesting title to real property owned by husband and
wife during their marriage which they intend to own together.
This form of holding title shares many characteristics
of Community Property but adds the benefit of the right
of survivorship similar to title held in joint tenancy.
There may be tax benefits for holding title in this manner.
Interest must be created on or after July 1, 2001.
o On the death of a spouse, the decendent’s interest
ends and the surviving spouse owns the property by survivorship
and owns the property in severalty. For example: Robert
Buyer and Brenda Buyer, husband and wife as community
property with right of survivorship.
3. Joint Tenancy - A form of vesting title to property
owned by two or more persons, who may or may not be married,
in equal interest, subject to the right of survivorship
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).
o Therefore, joint tenancy property is not subject to
disposition by will. For example: Robert Buyer and Brenda
Buyer, husband and wife as joint tenants.
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.
o Each tenant in common owns a share of the property and
is entitled to a comparable portion of income from the
property and must bear an equivalent share of expenses.
Each co-tenant may sell, lease or will to his/her heir
that share of the property belonging to him/her. For example:
Robert Buyer, a single man, as to an undivided 3/4 interest,
and Paula Purchase, a single woman, as to an undivided
1/4 interest, as tenants in common.
Other Ways Of Vesting Title Include As:
1. A Corporation*
o A corporation is a legal entity, created under state
law, consisting of one or more shareholders but regarded
under state law as having an existence and personality
separate from such shareholders.
2. A Partnership*
o A partnership is an association of two or more persons
who can carry on business for profit as co-owners, as
governed by the Uniform Partnership Act. A partnership
may hold title to real property in the name of the partnership.
3. A Trust*
o A trust is an arrangement whereby legal title to property
is transferred by the grantor to a person called a trustee,
to be held and managed by that person for the benefit
of the people specified in the trust agreement, called
the beneficiaries.
4. Limited Liability Companies (L.L.C.) *
o This form of ownership is a legal entity and is similar
to both the corporation and the partnership. The operating
agreement will determine how the L.L.C. functions and
is taxed. Like the corporation its existence is separate
from its owners.
*In cases of corporate, partnership,
or trust ownership, the title company will require that
it be furnished legal documents so that it may satisfy
itself as to ownership rights of the parties to the
transaction and any limitations which may exist on the
sale, transfer or encumbrance of the property. Required
documents may include corporate articles and by-laws,
certificates of partnerships, L.L.C. operating agreement
and trust agreements and/or certificates.
NOTE: HOW TITLE IS VESTED HAS IMPORTANT LEGAL CONSEQUENCES.
YOU MAY WISH TO CONSULT AN ATTORNEY TO DETERMINE THE
MOST ADVANTAGEOUS FORM OF OWNERSHIP FOR YOUR PARTICULAR
SITUATION.
Contact
us for more info on San Jose California Ways to Hold
Title
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