When you’re buying a home, the paperwork feels endless. Every day, there’s a new form or document to sign, and on closing day, that stack of paper just never seems to shrink.
It can be easy to just rush through and sign your initials without a second glance. But is this the best option? Or should you be looking at those documents with a closer eye?
When it comes to your title paperwork, it’s certainly the latter.
You see, in California, there are eight ways you can hold the title to your home — each one with very distinct legal repercussions. Want to sure make the home is yours in the event of a marriage or divorce? Need those proceeds once the home is sold? Want to pass your home onto your heirs when you die? Then choosing the right way to hold your title is key.
CALIFORNIA TITLE OPTIONS
You can hold title in eight different ways in the state of California. These are broken down into two categories: sole ownership and co-ownership. Let’s look at both.
This is when a single person or single entity holds the title to the home. This party can be:
- A single man or woman who is not legally married or in a domestic partnership
- A formerly married man or woman who is now legally divorced
- A married man or women who is holding the home as their sole and separate property
- A domestic partner who is holding the home as their sole and separate property
If a married man or woman or a domestic partner wants to hold the title solely, their spouse will need to sign a quitclaim deed, renouncing their claim to the property. This means they hold no legal rights or interest in the home.
Co-ownership is when two or more people hold the title to the home at the same time. In California, this can happen a number of ways.
- Community Property: This is commonly used when a married couple or pair of domestic partners buys a home. In the state, when property is held by a married man or woman, it is automatically assumed to be community property unless otherwise specified. Both partners hold a right to half the property and can leave it to an heir in their will. There is also the option to hold title as community property with right of survivorship. This essentially means that if one partner dies, their half of the property is passed on to the surviving spouse instead of any descendants or heirs.
- Joint Tenancy: This is typically used when roommates or unmarried partners purchase a home. Two or more partners can hold title in joint tenancy, with each carrying equal interest in the property. Joint tenancy must be declared from the outset, and all partners must acquire the title at the same time and by the same conveyance. If one joint tenant dies, their interest automatically goes to the surviving tenants.
- Tenancy in Common: Similar to joint tenancy, this is a way for two or more partners to hold title in a home. The difference is the partners don’t hold equal shares and can instead own fractional interests in the property. As such, they are owed income or proceeds in proportion to their share. If a tenant dies in this situation, their interests go toward their personal heir.
- Trust: California buyers can also hold title in a trust. This means the property is held by a trustee — a third-party who manages the property in the best interests of all beneficiaries.
The Bottom Line
There is no right or wrong way to hold title. If you are unsure how to go about handling your California home title, it is best to speak with a qualified real estate professionals about your interests and long-term plans. They can point you in the right direction before closing day rolls around.
Have more questions? Reach out to a SnapFi Mortgage Advisor Today!
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