How to Take Ownership of Property


Simon Offord

by Simon Offord on July 8, 2013

in First Time Home Buyer, Real Estate Law, Real Estate Titles

When a couple, partners, or family members decide to purchase property together they rarely consider how they are going to take title until the property is in escrow.  The purchase of a home is oftentimes the most significant purchase of one’s life to that point.  How you take title determines many future property rights, including taxes and how title will be affected upon the death of an owner.  We encourage our readers to consider this important decision before then.  This article is intended to give you a better understanding of the more common ways of holding title in California.

We will discuss the four most common ways individuals take title in California: joint tenancy, community property, community property with right of survivorship, and tenancy in common.  Keep in mind there are additional ways to take ownership, including in the name of an LLC or Corporation, or as trustees of a trust.  A future article will address these alternative options.

Please note that we are not tax advisors and thus would suggest that before deciding how to take title, the purchasers should also consult with a tax professional.

Joint Tenancy

The requirements for taking title by joint tenancy are very specific and, unless followed, a joint tenancy will not be created.  A joint tenancy in real property consists of an estate owned jointly in undivided and equal shares by two or more persons.  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.

The key characteristic in joint tenancy is the right of survivorship.  What this means is that when one joint tenant dies, title to the property is automatically vested by operation of law in the surviving joint tenant(s).  Therefore, joint tenancy property is not subject to disposition by will.  However, it is possible for one joint tenant to independently sever the joint tenancy; however that is a topic for another day.

Community Property

California is a community property state.  Community property is a form of vesting title to property owned or acquired together by married persons or domestic partners.  Community property is distinguished from separate property, which is all property acquired before the marriage or domestic partnership, or property acquired during marriage by way of separate gift or bequest.

In California, real property conveyed to a married person or to a domestic partner is presumed to be community property unless otherwise stated.  Typically, when taking title as community property, the deed will state: “Bob Buyer and Betty Buyer, husband and wife, as community property.”

When property is held as community property, each spouse has the right to dispose of his/her half of the community property by will. However, taking title as community property does protect the property interest of the spouse in the event of death.  Absent disposition of the decedent spouse’s share by will, the community property will automatically go to the surviving spouse.

Community Property with Right of Survivorship

Community property with right of survivorship is a specially created form of ownership in California, created by the Legislature in 2001.  This form of ownership is created by expressly providing for it in the transfer document.  Therefore, the deed would state something along the lines of: “Bob Buyer and Betty Buyer, husband and wife, as community property with right of survivorship.”

This form of holding title shares many of the characteristics of community property but adds the benefit of the right of survivorship (similar to title held in joint tenancy).  Therefore, when one spouse dies, title to the property is automatically vested in the surviving spouse.

There are certain tax benefits of taking title by either community property or community property with right of survivorship.

Tenancy in Common

Tenancy in common is the “residue” form of ownership when dealing with multiple owners of property.  If the form of ownership does not fall into any of the other categories above, you generally have a tenancy in common.

Any two or more individuals can take title as tenants in common.  Each owner takes an undivided fractional interest in the property.  Unlike in a joint tenancy, these fractional interests may be unequal in quantity or duration and may arise at different times.  For example, the deed could state:  “Bob Buyer, a single man, as to an undivided 40% interest, Bruce Buyer, a single man, as to an undivided 10% interest, and Betty Buyer, a single woman, as to an undivided 50% interest.”

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 the expenses.  Each co-tenant-in-common may sell, lease or will to his/her heir that share of the property belonging to him/her.  Therefore, upon the death of one owner, he or she can dispose of his or her interest by way of a will or trust, and the property does not automatically go to the other owner(s).

The “best” way to take title is different for each situation.  We advise that if you are unsure of your choice or do not understand the consequences of how to take title, you consult an attorney to discuss your options.

If you have any questions about co-ownership, or any other real estate related legal issues, please contact the Law Offices of Peter Brewer at (650) 327-2900 or on the web at www.BrewerFirm.com.

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