A home is one of the most valuable assets a person can own. When purchasing a home, title will need to be transferred. This process is most often handled by a title and escrow company, such as Landmark Title. A title officer will ensure that when it is time for the new ownership to transfer and take title, the correct steps are taken. How you take title ultimately determines the stipulations to your ownership of the property. To help you better understand the process and its importance, here are a few of the most common ways to take title of a property in the state of Arizona.
Sole ownership means that one single person holds the title for a piece of real estate. This is one of the simplest ways to take title and it is most often utilized when a single man or woman purchases a home or real estate property.
Arizona is a community property state, which means, by statute all property acquired by husband and wife is presumed to be community property unless stipulated otherwise. This type of title is only applied to married persons. It automatically gives 50% ownership to both spouses. If one of the spouses passes away their interest may pass by Will or Intestate Succession.
Community property with right of survivorship
Community Property with Right of Survivorship is the same as community property with the difference of when one spouse passes away, then their 50% of title is transferred to the surviving spouse. This allows probate to be avoided. It also ensures that the property will be directly passed on to your spouse. Community property with survivorship also allows for a stepped-up cost basis to determine Capital Gains Taxes for the surviving spouse.
Sole and separate
When you take title as sole and separate, it only applies to married individuals. If a spouse owns a property prior to marriage or acquires real estate as a gift or inheritance after marriage, it can be considered sole and separate. This can also apply if property that was acquired before marriage is exchanged after marriage. When a married person takes title as sole and separate property, their spouse must execute a disclaimer deed.
Joint tenancy with right of survivorship
Joint Tenancy is when two or more people hold title to one single piece of real estate. This type of agreement must be entered into when purchasing the property. Each person involved has equal rights to the property during their lives. If one of the joint tenants dies, their portion will be equally divided among the surviving tenants. The last surviving member inherits the total value of the title. This type of title allows for probate to be avoided. No marriage or relation is needed to enter into this type of title agreement but, the title will always be transferred to the surviving member and it cannot be willed to someone different.
Tenants in common
Tenants in common is another way to take title when the purchase involves two or more people. It essentially allows for equal or unequal percentages of ownership. For example, one person can have 20% interest in the property, while the other has 80%. This unequal percentage share in the property only applies to the financial ownership of the property, each of the parties involved has equal right to occupy and use the entire property. Everyone involved holds their title individually so they can sell it at any time or it can be willed to another party upon death. This type of agreement can be entered into at any time, even years after an original title agreement is made.
Landmark Title agency has a team of title and escrow experts that can answer any questions you may have about how to take title on your real estate dealings. Contact us today.