Tuesday, December 11, 2007

Methods of Holding Title

Okay, students, time once again for a little Real Estate 101. Today's topic is methods of holding title. Many people begin by wondering, "What does holding title mean?" Well, when you own a house, there are many ways to own it, or, in other words, many ways to have the title in your name.

If only it was as simple as owning an iPod or even a car. But, there are many important issues at stake in how a home is owned, such as division of ownership or what happens to the property after an owner dies. Holding title is a very complicated issue, so remember that this is a just a brief overview.

A married couple usually owns their home as either Community Property or Community Property with Right of Survivorship. In both cases, the couple owns equal shares in the "community property" and cannot be divided by creditors. When it comes to survivorship, the home will automatically become the sole property of the surviving spouse under the Right of Survivorship arrangement. Without Right of Survivorship, each spouse can leave their share to someone else (in which case title would be held as a Tenancy in Common).

So, what is a Tenancy in Common, then? When a property is held as a Tenancy in Common, there can be any number of owners with equal or unequal interests. For instance, three people could own a home, with one person owning 50% and the other two owning 25% each. Each person can sell their share as they please, or will it to someone after their death. Any new owner would simply become a new member of the Tenancy in Common arrangement. Some married couples even choose to hold title this way.

Finally, there is Joint Tenancy, which allows any number of owners as long as all the ownership interests are equal. If there are three owners, they each own 33.33% interest. If one person sells their share, the property then becomes a Tenancy in Common. But, if one of the owners dies, they cannot will their share to someone because Joint Tenancy has Right of Survivorship. The interest of the deceased owner is shared between the remaining owners. So, if one of the three owners dies, the surviving two owners would then have a 50% interest each.

Now, remember, this is a just an overview. There are many twists and turns on the path to choosing the right method of holding title for your home. You can get great information on this topic and others from Placer Title, an escrow and title company that is terrific to work with. If you have questions about holding title, please let me know. I am always happy to help. I can be reached at 510-547-5970 or MSmartt@jps.net.

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