What’s Your Title?

Question:

Marsha, my fiancée and I are buying a condo together. What do you think is the best way to take title to our new home?

Answer:

The manner in which one takes title to a property is a vital decision. Escrow officers, who know lots more about these matters than I do, will not give you advice when it comes to title. They always recommend, as I am now, to discuss your purchasing situation with a real estate attorney. Please do that.

I will tell you in general terms what various methods there are to take title. Putting someone on the deed and giving them title is easy and effortless. Removing someone from the property deed can be time consuming, costly and divisive.

What’s the difference between a property deed and title? A deed is a legal document that transfers title between entities. It is a tangible written document that must be recorded at the courthouse or assessor’s office. Title is the legal manner in which your bundle of rights is stated for a particular piece of property.

Here are four common ways in which people take title to their property.

First, there is Tenancy in Common and Joint Tenancy. Be aware of the differences between these methods of vesting. Tenants in Common may own different percentages of the estate. For example, one owner has 80 percent of the estate and the other has 20 percent. Both owners may pass on their interests to their heirs. With a Joint Tenancy, vesting ownership interests must be equal. When one Joint Tenant dies the other Joint Tenant automatically inherits the deceased partner’s interest.

Married people in California usually take title as Community Property or Community Property with Right of Survivorship. The difference has to do with taxes and how interest in the estate may be passed after one of the spouses dies. Your estate attorney can explain the difference to you.

Here’s an example illustrating the importance of title. There were two close Santa Barbara sisters. One was divorcing and at the same time purchasing a home. The other sister said to divorcing sister, “Put the title in my name so your soon to be ex-spouse won’t have any claim on the home.” Divorcing sister did that and behaved as if she were on title.  She paid the mortgage, the property taxes, lived there and maintained the house. Twenty years later, when the value had significantly appreciated, the helpful sister refused to relinquish title when the divorced sister wanted to sell. There was a lawsuit and the divorced sister eventually won the right and title to her own home. The court found she had behaved as the true owner over the years and her sister’s title had been a convenience. So much money and pain to rectify true title. Plus family dinners became awkward.

How you both take title to your new home is important and will affect you both for years to come. Get the legal advice you need, be worry free and enjoy your new home together.