Title to real property in California may be held by individuals, either in Sole Ownership or in Co-Ownership. Even if you've owned a home in another state, some of the means of holding title here may be unfamiliar to you since California is a community property state.
The following summary is provided for informational purposes only. There may be significant legal and tax consequences associated with the manner in which title is held. You may want to consult an attorney, estate planner or a CPA if you require specific advice on how you should hold title.
Sole Ownership:
A Single Man or Single Woman: Vesting of a man or woman who has not been legally married.
An Unmarried Man or An Unmarried Woman: Vesting of a man or woman who, having been married, is legally divorced.
A Married Man or Woman As His or Her Sole and Separate Property: Vesting of a man or woman wishing to acquire title in his or her name alone. The spouse must legally consent, by quitclaim deed or otherwise, to the transfer, thereby relinquishing all right, title and interest in the property.
Co-Ownership:
Co-ownership of real property occurs when title is held by two or more persons. There are several variations as to how title may be held in each type of ownership:
Tenancy* | ||||
| Parties | Any number of persons (can be husband and wife). | Any number of persons (can be husband and wife). | Only husband and wife. | Only Partners (any number). |
| Division | Ownership can be divided into any number of interests equal or unequal. | Ownership interests must be equal. | Ownership interests are equal. | Ownership interest is in relation to interest in partnership. |
| Title | Each co-owner has a separate legal title to his undivided interest. | There is only one title to the whole property. | Title is in the "community" (Similar to title being in partnership). | Title is in the "partnership." |
| Possession | Equal right of possession. | Equal right of possession. | Equal right of possession. | Equal right of possession but only for partnership purposes. |
| Conveyance | Each co-owner's interest may be conveyed separately by its owner. | Conveyance by one co-owner without the others breaks the joint tenancy. | Both co-owners must join in conveyance of real property. Separate interests cannot be conveyed. | Any authorized partner may convey whole partnership property. No partner may sell his interest in the partnership without the consent of his co-partners. |
| Purchaser's Status | Purchaser becomes a tenant in common with the other co-owners. | Purchaser becomes a tenant in common with the other co-owners. | Purchaser can only acquire whole title of community. Cannot acquire a part of it. | Purchaser can only acquire the whole title. |
| Death | On co-owner's death his interest passes by will to his devisees or heirs. No survivorship right. | On co-owner's death his interest ends and cannot be willed. Survivor owns the property by survivorship. | On co-owner's death, half goes to survivor in severalty. Up to one-half goes by will to decedent's devisees or by succession to survivor. | On partner's death, his partnership interest passes to surviving partner pending liquidation of partnership. Share of deceased partner then goes to his estate. |
| Successor's Status | Devisees or heirs become tenants in common. | Last survivor owns property in severalty. | If passing by will, tenancy in common between devisee and survivor results. | Heirs or devisees have right in partnership interest but not in specific property. |
| Creditor's Rights | Co-owner's interest may be sold on execution sale to satisfy creditor. Creditor becomes a tenant in common. | Co-owner's interest may be sold on execution sale to satisfy creditor. Joint tenancy is broken. Creditor becomes tenant in common. | Co-owner's interest can't be seized and sold separately. Whole property may be sold to satisfy debts of either husband or wife, depending on the debt. | Partner's interest cannot be seized or sold separately by his personal creditor but his share of profits may be obtained by a personal creditor. Whole property may be sold on execution sale to satisfy partnership creditor. |
Presumption | Favored in doubtful cases except husband and wife case. | Must be expressly stated and properly formed. Not favored. | Strong presumption that property acquired by husband and wife is community. | Arises only by virtue of partnership status in property placed in partnership. |
*Important Note: Effective July 1, 2001, a husband and wife will have the opportunity to hold title as Community Property with Right of Survivorship.
This new form of ownership provides
(1) for property ownership to pass automatically without administration to the surviving spouse when one spouse dies (as is the case now when husband and wife hold title as Joint Tenants with Right of Survivorship), and
(2) allows the surviving spouse to receive the stepped-up basis in the property for Federal tax purposes (as is the case now when husband and wife hold title as Community Property).
Married couples who have taken title to real estate as either joint tenants or community property should check with their attorney, estate planner or tax consultant to see if it would be advisable to record a new deed on or after July 1 to change the way they hold title.
Information provided by North American Title Company and Benefit Land Title Insurance Company.