The OC Housing Specialist® Ultimate Guide to Buying, Selling, & Renting in Southern California

What Type of Title Should I Choose?

If you carefully read what you are signing when you are purchasing a property, you will notice there is a section that requires you to make a choice as to what type of title you would like to obtain.

Most people have no idea what any of these choices mean and they end up asking their real estate or escrow agent for advice. Unfortunately, the law limits agent discussions on this topic to mainly definitions, meaning they cannot help you make a choice. Instead, they must refer you to a real estate attorney for explanation beyond definition as to how each type of title would affect you personally.

Before you are at the close of escrow and staring at this inevitable question, let’s prepare you by taking a look at the choices you have for holding title. Here is a simplified list from the Los Angeles Times:

1. Sole ownership/Ownership in Severalty
If you are single, one way to hold title to your home is in your name alone.
2. Tenants in common
When two or more co-owners take title to real estate. Each tenant in common owns a specified interest in the property. It need not be equal. Each tenant in common can sell or pass his interest by his will to whomever he or she wishes. Especially popular in second marriages, so each spouse can will his or her share to the children from a first marriage.
3. Joint tenancy with right of survivorship
When title is held in joint tenancy with right of survivorship, all co-owners must take title at the same time; they own equal shares and the surviving co-owner winds up owning the entire property. In some states, when husband and wife use this method, it is called tenancy by the entireties.
4. Community property
Husbands and wives who acquire realty in the community property states of California, Nevada, Louisiana, Wisconsin, Texas, Arizona, Washington, Idaho and New Mexico can take title as community property. Each spouse then owns half the property, which can be passed by the spouse’s will either to the surviving spouse or someone else.
5. Living trust
Probably the best way to hold title to homes and other real property is in a revocable living trust. Until the death or disability of the trust creator, the home and other real estate in the living trust are treated normally. Stocks, bonds, bank accounts, automobiles and other major assets can also be held in a living trust. Since the living trust is revocable, these assets can be bought, sold and financed normally. When the trustor dies, the assets are distributed according to the trust’s terms.

The author of the above list, Robert J. Bruss, is a real estate attorney, broker, and author of Picking the Best Way to Hold Title to Your Home, featured by the Los Angeles Times.

According to Robert J. Bruss, a real estate attorney, “the five most popular methods of holding residence titles all have their pros and cons. Overall, the best method for most homeowners is the living trust, because of all its advantages.” To read the full article highlighting all pros and cons, simply click either of the above links or here.

To find out which type of title is right for your personal situation, it is recommended you consult with a real estate attorney in your area.



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This entry was posted on January 28, 2016 by in Buying, DIY, Finance, Investment.

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