Overview
There are several different ways to hold title (ownership) to your property and each has advantages. When considering which option is best, think about how the rights will be dispersed and what happens when it comes time to sell.
Sole Ownership
Sole ownership may be described as ownership by an individual or other entity capable of acquiring title, examples below:
- A Single Man or Woman, an Unmarried Man or Woman or a Widow or Widower – A man or woman who is not legally married or in a domestic partnership.
- A Domestic Partner as His or Her Sole and Separate Property – A domestic partner who wishes to acquire title in his or her name alone.
- A Married Man or Woman as His or 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.
Co-ownership
Title to property owned by two or more persons may be vested in the following forms:
- Community Property – A form of vesting title to property owned together by married persons or by domestic partners. In California, real property conveyed to a married person, or to a domestic partner is presumed to be community property, unless otherwise stated (i.e. property acquired as separate property by gift, bequest or agreement). Since all such property is owned equally, both parties must sign all agreements and documents transferring the property or using it as security for a loan. Each owner has the right to dispose of his/her one half of the community property by will.
- Community Property with Right of Survivorship – title to property owned together by spouses or by domestic partners. 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. There may be tax benefits for holding title in this manner. On the death of an owner, the deceased’s interest ends and the survivor owns all interests in the property.
- Joint Tenancy – title to property owned by two or more persons, who may or may not be married or domestic partners, in equal interests, 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). Joint tenancy property is not subject to disposition by will.
- Tenancy in Common – 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. 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 expenses. Each co-tenant may sell, lease or will to his/her heir that share of the property belonging to him/her.
Other ways
The options below require documents that may include corporate articles and bylaws, partnership agreements, LLC operating agreements and trust agreements and/or certificates:
- Corporation – a legal entity, created under state law, consisting of one or more shareholders but regarded under law as having an existence and personality separate from such shareholders.
- Partnership – 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.
- Limited Liability Companies (LLC) – a legal entity and is like both the corporation and the partnership. The operating agreement will determine how the LLC functions and is taxed. Like the corporation its existence is separate from its owners.
- Trustees of a Trust – an arrangement whereby legal title to property is transferred by a 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. A trust is generally not an entity that can hold title in its own name and instead title is often vested in the trustee of the trust. Example: John Doe Buyer trustee of the Buyer Family Trust.