Deed vesting options
The following is not legal advice but simply a description of
some of the different methods that title can be held in real estate.
Sole ownership is the first
way to hold title. Basically, this means that one man or one woman owns 100% of
the property less the value of any property liens. However, it is not quite as
simple as it sounds. Sole ownership can be held several ways. If you you are
unmarried, you can hold sole title as an unmarried man,
or unmarried woman, or a single man or single woman. Per the
dictionary definition single man seems the same as unmarried man. However, some
title company personnel insist that unmarried means now single but previously
married, while single means single and never married. I have not found any
documentation to support this, but have run into it on several occasions.
A person may also be married but hold sole and separate property in
their name only. Laws vary between states, some of which are community property
states, and some of which are not. However, generally, a person may hold sole
and separate title to property even if married if the property was owned prior
to marriage, purchased from separately owned money, or inherited as sole and
separate property. A prenuptial agreement can also identify separate property.
Even if property in marriage begins as sole and separate, it can become
community or joint property if separate assets are mingled. For example, if the
mortgage on a separate property is paid with community money, or if separate
bank accounts are merged, the property can become community. If single, no
further research may be necessary. However, if you are married and trying to
keep title separate, you should consult an attorney with expertise on state
laws for the state you reside in.
Another form of title vesting is community property,
used only in community property states, many of which developed their laws with
some Spanish influence, mostly in sun belt states. Community property is
a form of joint ownership for marital assets in community property
states. Any property acquired during marriage using marital assets is
generally considered community property in these states. Community assets
are owned 50% each. As mentioned above, property owned separately, prior
to marriage, can also be converted to community property using a quitclaim
deed. They can also be mingled, in some cases unintentionally, resulting
in all or part of the formerly separate property to become community
property. Arizona, California, Idaho, Louisiana, Nevada, New Mexico,
Texas, Washington, and Wisconsin are community property states.
Some people use joint tenancy for title vesting in order to
ensure more than one party has an undivided ownership stake in real estate
title. As with other forms of title vesting, a quitclaim deed can be used
to create a joint tenancy when a property is acquired or to add an owner after,
either due to marriage or some other reason. Joint tenancy is used for
marital assets in states not using community property, and can be used in
community property states as well. Joint tenants are not limited to
married couples. Any 2 or more parties can become joint tenants in a
single property. Joint tenancy often includes right of survivorship.
This means that if one joint tenant dies, their interest reverts to the other
joint tenants. This can be identified on the quitclaim deed, for example
as joint
tenants with rights of survivorship to eliminate any
uncertainly as to the intent of the parties. Laws vary on joint tenancy and
rights of survivorship by state, so additional local research should be done
for your state to determine if this is the right form of title for your needs.
Next, tenants in common is another way to hold
title. This is also an undivided interest in property among 2 or more
parties, and parties can be added or removed using a quitclaim deed. The
biggest difference between tenants in common and joint tenants is generally
that there are no rights of survivorship. In other words,
if one tenant in common dies, their interest passes on to their heirs, either
by will, trust, or intestate (without a will). This form of title vesting
is often useful for non-married investment partners in real estate. Also,
unlike community property or joint tenancy, each tenant in common’s interest in
the property need not be equal.
Another form of title vesting is tenancy by the entirety.
This is similar to joint tenancy between husband and wife, but each spouse owns
the entire property rather than half. No one spouse can sell any portion
of the property without the consent of the other. A benefit of this form
of title vesting is that if a creditor is owned money by one of the owners, the
creditor cannot collect against the property unless the spouse dies who does not
owe the creditor. The surviving spouse owns the entire property with no
probate required. However, if one spouse becomes unavailable or
incompetent, it can be difficult for the other spouse to sell the property
under this form of title vesting.