One of the most complex issues for Buyers sometimes is how to take Title. Generally there is little understanding of this issue and we take it as kind of directed by the Title Company.
However, these days Title Companies, Lenders, and Realtors are getting more and more skittish about giving advise for legal reasons. This has always seemed odd to me as the entire purpose of using an expert is to get good advise.
The major concern in giving advise is each situation is unique and there can be a number of different factors to that decision. Furthermore there is always new case law and situations developing.
All that considered here is a basic explanation of how to take Title and what it means in California. Remember this is general advise and information and laws are always changing. There may also be subtle issues that are unique to you not covered by this general advise.
Right of the bat there are two basic ways: Sole Ownership or Co-Ownership. That part is easy enough. Now if you are purchasing is as Co-Ownership there are two ways to do that: Co-Owners or Co-Owners of an entity (like an LLC or a Corporation) that becomes the vested owner.
There are only 4 ways for Co-Owners to vest Title under their individual names:
- Joint Tenants
- Tenants in Partnership
- Tenants in Common
- Community Property
In general and with some restrictions any one of the owners in each of the 4 types of ownership can posses the property, lease the property (non-consenting spouse can object within a year), sell an individual interest (except community property), and encumber (except when a co-ownership agreement prohibits). Joint owners cannot prohibit co-owners from a right to posses or create an easement against another co-owner.
Joint Tenancy is most often used with Husbands and Wives, but other people or family members can form a Joint Tenancy. Joint Tenancy is often used as part of estate planning. There are 4 Unities of Joint Tenancy: Unity of Title (all on Title), Unity of Time (all receive interest at the same time); Unity of Interest (all have equal Interest); and Unity of Possession (all have right to possess the entire property). The key feature is when one of the owners dies the rest of the owners get the persons rights of ownership.
Tenancy in Partnership is like Tenancy in Common with every owner on the Title, but is managed, owned and ran by a Partnership again.
Tenancy in Common is the default Title given when more than one person buys a property and those people are not married to each other. Each owner can own a defined portion of the property and unlike Joint Tenancy each owner controls what happens to his ownership interest after death (You can Will it to someone).
Community Property is the default method of holding Title when a husband and wife buy together but do not declare another method of holding Title. I won't go into all the details on this one, but you need to work together. Think of it as a partnership.
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