Ways to Take a Title
Community Property
Community Property is a method of Co-ownership for married persons only.
Ownership interests are equal, and both co-owners must join in transferring or encumbering
the property. Upon the death of one spouse, the deceased spouse’s interest will pass
by intestate succession or through a will.
- Requires a valid marriage between two persons.
- Each spouse holds an undivided one-half interest in the estate.
- One Spouse cannot partition the property by selling his or her interest.
- Requires signatures of both spouses to convey or encumber.
- Each spouse can devise (Will) one-half of the Community Property.
- Upon death the estate of the decedent must be "Cleared" through
Probate, Affidavit or Adjudication.
- Both halves of the Community Property are entitle to a "Stepped
Up" tax basis as of the date of death.
Community Property with Right of
Survivorship
This is a method of co-ownership that allows a married couple to hold
Title as husband and wife while providing for succession outside of probate on the death
of either spouse. Each spouse holds an undivided one-half interest in the estate. It
requires signatures of both spouses to convey or encumber. Both halves of the community
property are entitled to a "stepped up" tax basis as of the date of death.
(Effective January 1, 1995 / ARS 33-341)
- Requires a valid marriage between two persons.
- Each spouse holds an undivided one-half interest in the estate.
- One Spouse cannot partition the property by selling his or her interest.
- Requires signatures of both spouses to convey or encumber.
- Estate passes to surviving spouse outside of Probate.
- No court action is required to "Clear" Title upon the first
death.
- Both halves of the Community Property are entitle to a "Stepped
Up" tax basis as of the date of death.
Joint Tenancy with Right of Survivorship
Joint Tenancy is a method of co-ownership that gives Title to the
property to the last survivor. There is one Title to the whole property, and ownership
interests cannot be divided. Title can be acquired by a number of people, or a husband and
wife. On a co-owners death, his or her interest ends and is transferred by operation of
law to the survivor(s). The Joint Tenancy may be broken if a co-owner conveys his or her
interest without the other(s) or if a creditor acquires the interest through an execution
sale.
- Parties need not be married; may be more than two Joint Tenants.
- Each Joint Tenant holds an equal and undivided interest in the estate,
unity of interest.
- One Joint Tenant can partition the property by selling his or her
interest.
- Requires signatures of all Joint Tenants to convey or encumber the whole.
- Estate passes to surviving Joint Tenants outside of Probate.
- No court action to "Clear" Title upon death of Joint Tenants.
- Deceased tenant’s share is entitled to a "Stepped Up" tax
basis as of the date of death.
Tenancy in Common
This is a method of co-ownership where parties DO NOT have survivorship
rights and each owns a specific undivided interest in the entire title. Each co-owner has
a separate title to his or her interests, and can transfer or encumber his or her own
interest without permission or consent of the other co-owners. Ownership can be divided
into any number of interests, equal or unequal, and any number of persons and a husband
and wife can acquire title. On a co-owner’s death, his or her interest passes by will
or intestate succession. A co-owners interest can be sold through an execution sale and
the creditor then becomes a tenant in common.
- Parties need not be married; may be more than two Tenants in Common.
- Each Tenant in Common holds an undivided fractional interest in the
estate. Can be disproportionate; e.g. 20 and 80%, 50% and 40%, etc.
- Each tenants share can be conveyed, mortgaged or devised to a third
party.
- Requires signatures of all tenants to convey or encumber the whole.
- Upon death, the Tenant’s proportionate share passes to his or her
heirs by will or intestacy.
- Upon death the estate of the decedent must be "Cleared" through
Probate, Affidavit or Adjudication.
- Each share has it’s own tax basis.
Sole and Separate
This method of ownership is for a married person dealing with their Sole
and Separate property. A husband or wife can acquire title as Sole and Separate if the
property is owned by either spouse before marriage or acquired after marriage by gift,
devise, descent or specific intent. If a married person acquires title as Sole and
Separate property, his or her spouse must execute a Disclaimer Deed to avoid the
presumption of Community Property. (If you are divorced, the Title Company may request
proof of your divorce to verify the legality of this method of ownership.)
Corporation
Title may be taken in the name of a Corporation provided the corporation
was duly formed under the laws of the State of the formation of the Corporation, and is in
Good Standing in the State of it’s incorporation.
General Partnership
Title may be taken in the name of a General Partnership provided the
General Partnership was duly formed under the laws of the State of the formation of the
Partnership. A Partnership is defined as a voluntary association of two or more persons as
co-owners in a business for profit.
Limited Partnership
A Limited Partnership requires two or more people. Under state law, one
or more individuals are general partners and one or more individuals are limited partners.
A certificate of Limited Partnership must be filed in the Office of the Secretary of
State, a certified copy of which must be recorded.
Additional Notes
Parties may choose to hold Title in the name of an Entity, e.g.; a
Corporation, a Limited Liability Company, a Limited Partnership or General Partnership, or
a Trust. Each method of taking Title has certain significant legal and tax consequences. Therefore,
you are encouraged to obtain advice from an Attorney or other qualified professional
should you have any questions or concerns as to how to take Title to Real Estate.
