One of the decisions that a buyer has to make when purchasing a home is how they will take title. Below is a handy chart that describes the more common ways of taking title, and some of the implications for each form of taking title.
Important Note: How you take title can have important legal and financial consequences. I am not an accountant or otherwise qualified to provide tax advice. I am also not an attorney or otherwise qualified to provide legal advice. Always consult your favorite accountant/financial advisor/tax specialist/attorney to make sure that you are taking title to property in a way that is best suited to your specific circumstances.
Tenancy in Common
Community Property With Right of Survivorship
|Who Can Hold Title This Way||Two or more persons (may be spouses or domestic partners)||Two or more persons (may be spouses or domestic partners)||Spouses or domestic partners||Spouses or domestic partners|
|How is it Divided?||Ownership can be divided into any number of interests, equal or unequal||Ownership interests must be equal||Ownership interests must be equal||Ownership interests must be equal|
|How is it Created?||One or more conveyances (law presumes interests are equal if not otherwise specified)||Single conveyances (creating identical interests); vesting must specify joint tenancy||Presumption from marriage or domestic partnership or can be designated in deed||Single conveyance and spouses or domestic partners must indicate consent which can be on deed|
|Possession and control||Equal||Equal||Equal||Equal|
|How can a co-owner’s interest be Transferred?||Each co-owner may transfer or mortgage their interest separately||Each co-owner may transfer his/her interest separately but tenancy in common results||Both spouses or domestic partners must consent to transfer or mortgage||Both spouses or domestic partners must consent to transfer or mortgage|
|How does this impact the creations of liens by other co-owners against the property?
||Unless married or domestic partners, co-owner’s interest not subject to liens of other debtor/ owner but forced sale can occur||Co-owner’s interest not subject to liens of other debtor/owner but forced sale can occur if prior to co-owner’s/debtor’s death||Entire property may be subject to forced sale to satisfy debt of either spouse or domestic partner||Entire property subject to forced sale to satisfy debt of either spouse or domestic partner|
|What happens when a co-owner dies?||Decedent’s interest passes to his/her devisees or heirs by will or intestacy||Decedent’s interest automatically passes to surviving joint tenant(â€œRight of Survivorshipâ€)||Decedent’s 1/2 interest passes to surviving spouse or domestic partner unless otherwise devised by will||Decedent’s 1/2 interest automatically passes to surviving spouse or domestic partner due to right of survivorship|
|Some possible advantages or disadvantages to taking title in this way may be…||Co-owners interests may be separately transferable||Right of Survivorship avoids probate; may have tax disadvantages for spouses||Qualified survivorship rights; mutual consent required for transfer; surviving spouse or domestic partner may have tax advantage||Right of survivorship; mutual consent required for transfer; surviving spouse or domestic partner may have tax advantage|
Information in this table is based upon “Ways To Take Title of Real Estate in California.”