There are many different ways for people to hold title to property in California. You should always consult with an attorney before deciding on how to hold title to California real property.
California real property can be held by people as a sole owner or as a co-owner with another person. Co-ownership of California real property involves two or more persons or entities acquiring and holding title together.
Sole Ownership by Person or Entity
- A Single Person
Property would be held as an individual who is not and has never been legally married. Example: Jane Doe, a single woman.
- An Unmarried Person
Property would be held as an individual, who was married at one time but is now legally divorced; or an individual, having been a registered domestic partnership at one time, but the partnership is now legally dissolved. Example: Jane Doe, an unmarried woman.
- A Married Person or Registered Domestic Partner as their Sole and Separate Property
Property would be held this way when a married individual or registered domestic partner desires to purchase and hold title to California real property solely in his or her name. The spouse or registered domestic partner must generally consent to this by executing and recorded a Quit Claim Deed for the property in question. Example: Jane Doe, a married woman, as her sole and separate property or Jane Doe, a registered domestic partner, as her sole and separate property.
A Legal Entity
Examples of entities that can hold title to property are:
- General partnerships
- Limited partnerships
- Limited liability companies
- Other legal entities Example: XYZ Managing Corporation, a California Corporation.
- Co-Ownership by Person or Entity
California Civil Code defines community property as property acquired by a husband and wife, or registered domestic partners, together or by a husband or wife, or registered domestic partners, individually during the marriage. Real estate acquired and held by a married person or registered domestic partners is deemed to be community property of the husband and wife, or both partners, unless otherwise stated and agreed to in writing by the spouse or partner who will not be on title.
The husband and wife, or registered domestic partners, both have the right to dispose of one-half of the community property under community property law. The one-half of the community property will automatically go to the surviving spouse if the deceased spouse did not otherwise disposed of the community property to someone other than his or her spouse. Example: John Doe and Jane Doe, as husband and wife as community property.
Community Property with Rights of Survivorship
Community property of a husband and wife, or registered domestic partners, when expressly declared on title to be community property with rights of survivorship, shall, upon the death of one of the spouses, or registered domestic partners, pass to the survivor without going through probate. Example: John Doe and Jane Doe, as husband and wife as community property with rights of survivorship.
California Civil Code defines joint tenancy as a joint interest owned by two or more persons in equal shares. Title is usually taken as joint tenancy when the real property is acquired. However, joint tenancy can also be created by a transfer that expressly declares the interest in the real property to be joint tenancy.
The most important benefit of joint tenancy is the right of survivorship. Title to real property will immediately pass to the surviving joint tenant upon the death of a joint tenant without the need to go through probate. Any two or more people may hold title as joint tenants and they do not need to be married or registered domestic partners to hold title this way (and gain the benefit of right of survivorship). Example: John Doe and Jane Roe, as joint tenants.
Tenants in Common (TIC)
Individuals or entities may acquire an undivided percentage interest in a specific piece of real property with each tenant-in-common holding a different percentage ownership in the real property. There is no right of survivorship, and a tenant-in-common’s interest will not automatically avoid probate by right of survivorship unless held in Trust or some other method that would avoid probate. Example: Jane Doe, a single woman, as to an undivided 50% interest, as tenants-in-common.
Title Holding Trust (THT)
Real estate in California can be acquired and held by a Title Holding Trust or Land Trust. Legal and equitable title to the California real property is bought and held by the Trustee of the Title Holding Trust. The Title Holding Trust holds the property on behalf of the beneficiary of the trust. The beneficiary retains control over the trust and has total power of direction over the trust. The trustee cannot act without explicit written authorization and direction from the beneficiary or beneficiaries. Example: Trust Financial Services, LLC, as Trustee, of THT Trust No. 12 3456.
The above is a summary of the more common ways to acquire and hold real property in California. It is provided for general informational purposes only and should not be relied upon for legal advice. There are significant legal and tax implications depending on how you choose to hold title to real property. You should consult with a legal advisor before making any decisions on how you or you and your spouse or partner (or you and another individual) will hold title to real property in California.