Title is how you own a property. A title on a deed tells others who own a property. It is the actual legal ownership of the property, while a deed is a document that serves as a record of that ownership. The deed is not the actual ownership of the property.
Knowing how you plan to take the Title of a property is just as important as knowing how you plan to purchase a property and should be part of your toolkit for buying real estate.
In California, you can own Title as a Natural person or an Unnatural person. Solo or with more than one person.
A human being. Needs a Social Security Number or ITIN. Anyone who plans to be on the Title must sign all the documents that are part of the transaction.
One can use a power of attorney can pass off the signatory duties to another person.
A company. One is made up of one person or made up of several people. One can use a representative signatory to pass off signatory duties to a singular person.
This video does a good job of explaining different ways to take Title in California.
Natural Sole Ownership of Real Estate in California
A Single Man or Woman, an Unmarried Man or Woman or a Widow or Widower:
A man or woman who is not legally married or in a domestic partnership. A man or woman who is not legally married or in a domestic partnership acquires a title. Widows/widowers and men or women who have been previously married and are now legally divorced are also included in this category.
For example, Jane Buyer is a single woman.
A Married Man or Woman as His or Her Sole and Separate Property:
A married man or woman may buy a house in his or her name alone and own all of the accompanying rights. In order for this to occur legally, the spouse must relinquish all rights and title to the property and also may sign a quitclaim deed. The same rules will apply to same-sex married couples.
For example, Jane Buyer, a married woman, as her sole and separate property.
A Domestic Partner as His or Her Sole and Separate Property:
A domestic partner who wishes to acquire title in his or her name alone.
For example, Jane Buyer, a registered domestic partner, is her sole and separate property.
Natural Co-Ownership of Real Estate in California
Co-ownership of a property is required when two or more people hold the title for a house together.
This is the Title most commonly vested between a married couple or a domestic partnership in California.
Each spouse has the rights to half of the property, so each will have to sign off on selling the property and taking out loans.
A spouse may choose to transfer his or her rights to the house to another person in his or her will.
In California, real property conveyed to a married person or a domestic partner is presumed to be community property unless otherwise stated (i.e., property acquired as separate property by gift, bequest, or agreement).
Since all such property is owned equally, both parties must sign all agreements and documents transferring the property or using it as security for a loan. Each owner has the right to dispose of his/her one-half of the community property by will.
For example, Bruce Buyer and Jane Buyer, husband, and wife, as community property, or Sally Smith and Jane Smith, registered domestic partners, as community property.
Another example of same-sex couples is Sally Smith and Jane Smith, who are married to each other as community property.
Community Property with Right of Survivorship
The exact form of title as above with the added benefit of the right of survivorship. The right of survivorship in California states that when one spouse dies, the Title and ownership will remain with the living spouse instead of being passed on to their children.
This form of holding Title shares many of the characteristics of community property but adds the benefit of the right of survivorship similar to Title held in joint tenancy.
There may be tax benefits for holding title in this manner. On the death of an owner, the decedent’s interest ends, and the survivor owns all interests in the property.
For example, Bruce Buyer and Jane Buyer, husband, and wife, as community property with the right of survivorship, or John Buyer and Bill Buyer, husband and husband, as community property with the right of survivorship.
Another example of same-sex couples is Sally Smith and Jane Smith, registered domestic partners, as community property with the right to survivorship.
A Title between two persons not married or in a domestic partnership that vests equal shares and interests in the property.
The right of survivorship is automatically awarded to the surviving person on the Title. Therefore, joint tenancy property is not subject to disposition by will.
This Title must be created and vested for all parties simultaneously, and the document must expressly denote the intent of joint tenancy.
For example, Bruce Buyer, a married man*, and George Buyer, a single man, as joint tenants.
*Note: If a married person enters into a joint tenancy that does not include their spouse, the Title company insuring Title may require the spouse of the married man or woman acquiring title to consent to the joint tenancy specifically. The same rules will apply to same-sex married couples and domestic partners.
Tenancy in Common
Tenancy in common is a Title for two co-owners without equal shares or ownership in the property.
One may have more than the other, which is agreed upon before signing the documents.
Each tenant may sell/lease or will their portion of the property whenever they please.
There is no right to survivorship in this Title. If one tenant dies, the rights will go to the heirs of the deceased.
For example, Bruce Buyer, a single man, as to an undivided 3/4 interest, and Penny Purchaser, a single woman, has an undivided 1/4 interest.
Unnatural Person ownership:
Trustees of a Trust:
A trust is an agreement where a grantor allows a trustee to manage and hold the property in the best interest of the beneficiaries.
A trust is generally not an entity that can hold Title in its own name. Instead, title is often vested in the trustee of the trust.
For example, Jane Buyer, trustee of the Buyer Family Trust.
A corporation is a legal entity created under state law, consisting of one or more shareholders but regarded under law as having an existence and personality separate from such shareholders.
For example ABC Inc. a California corporation
A partnership is an association of two or more persons who can carry on business for profit as co-owners, as governed by the Uniform Partnership Act. A partnership may hold title to real property in the name of the partnership.
For example, ABC LLP, a California Limited liability partnership
Limited Liability Companies (LLC):
This form of ownership is a legal entity and is similar to both the corporation and the partnership.
The operating agreement will determine how the LLC functions and is taxed. Like the corporation, its existence is separate from its owners. It can be owned by one person aka a single-member LLC or by several individuals with one or more signatories.
For example, ABC LLC, a California limited liability company