When you’re buying a house, you have a whole lot of documents to sign, each of them with their small print, definitions, and legalise. But one distinction that shouldn’t be ignored when buying a home is how you will hold title. In California, there are 8 basic ways you can hold title to your house (or any real property), falling under the umbrellas of Sole Ownership or Co-Ownership. In this blog, we’ll cover the essential information you should know about holding title, with the differences and benefits you’ll find.
Remember that this is just a summary for educational purposes, so consult your title company for more detailed information, and it’s a good idea to chat with your CPA or real estate attorney for specific advice on how to vest title.
The 8 common ways to hold title to a house in California are:
Sole ownership can best be described as when an individual or entity acquires title. Some examples of holding title through sole ownership include:
A man or woman who is not legally married or in a domestic partnership.
A man or woman who have been married in the past but are now legally divorced.
A Married Man/Woman, As His/Her Sole And Separate Property
It’s possible for a married man or woman to buy a house and hold the title in her or his name alone. For this to occur, their spouse must give consent and sign off on a quitclaim deed or otherwise relinquish all rights, title, and interest in the property.
A Domestic Partner as His/Her Sole and Separate Property
This occurs when someone is in a domestic partnership but wishes to hold title to a property in their name alone – and their partners consent by signing off and relinquishing all interest just like in the case above.
When two or more people hold title to their house together, they vest title through co-ownership.
This is a common way to vest title to a house or property that’s owned by a married couple or domestic partners. According to the California Civil Code, real property conveyed to a married man or woman is automatically assumed to be community property, unless otherwise specified (by gift, bequest, or agreement). When property is held as community property, both spouses or partners have the right to half of the house or property, so both need to sign all agreements and documents to sell or transfer the property or take out a loan against it. However, each spouse has the right to dispose of/leave their ownership right in the property to an heir in their will.
Community Property With Right Of Survivorship
This form of vesting title for a house or property owned together by spouses or domestic partners has one additional benefit: the right to survivorship. What that means is that when a husband and wife, for example, hold community property with right of survivorship and one of them dies, their remaining interest in the property does not pass to their descendants but remains with the living spouse. Sometimes, spouses or domestic partners vest title as community property with right of survivorship because of tax advantages it offers.
According to the California Civil Code, joint tenancy is a form of vesting title to two or more persons with equal shares and interests. None of them have to be married or domestic partners, and they’re subject to the right of survivorship in the surviving joint tenant(s). So when one of these two or more joint tenants dies, title to the property automatically and immediately vests in the name of the surviving tenant(s). With joint tenancy, the title must be acquired for all of these parties at the same time and by the same conveyance, with the document expressly declaring their intention to create a joint tenancy estate.
Tenancy In Common
This form of vesting title to a property allows for two or more co-owners just like joint tenancy. However, with tenancy in common they are allowed fractional –or unequal – ownership, so they are owed that same proportion in income or profit it generates, as well as expenses. There are also no rights to survivorship, so if one tenant dies, the title does not automatically go to the remaining tenants, but can be vested to the deceased person’s heirs. Each individual tenant may also sell/lease, or will their share of the property as they wish.
In California, you may also hold title to your house or property in a trust. A trust is an arrangement where the legal title to your property is transferred by a grantor to a person called a trustee, who holds and manages it according to the best interests of the beneficiaries. For that reason, a trust usually doesn’t hold title in its own name, but title is vested to the trustee, while the trust still holds legal title and rights.