Common Ways of Holding Title

How Should I Take Ownership of the Property I am Buying? (Vesting of Title)

The form of ownership taken—the vesting of title—is a critical decision that determines who may sign documents and influences future rights concerning:

 

• Real property, income, inheritance, and gift taxes.
• Transferability of title and exposure to creditor’s claims.
• Probate implications in the event of death.

The Land Title Association (LTA) advises buyers to give careful consideration to how title will be held and suggests consulting legal counsel, especially for multiple owners, as these definitions are for informational purposes and should not be relied upon as legal definitions.

Common Methods of Holding Title

SOLE OWNERSHIP

Sole ownership is ownership by an individual or other entity capable of acquiring title.

 

1. A Single Man/Woman: An individual who has not been legally married.
   
   Example: Bruce Buyer, a single man.
2. An Unmarried Man/Woman: An individual who was previously married and is now legally divorced.
   
   Example: Sally Seller, an unmarried woman.
3. A Married Man/Woman as His/Her Sole and Separate Property: A married person who wishes to acquire title in their name alone. The title company will typically require the spouse to specifically disclaim or relinquish their right, title, and interest to the property.
   
   Example: Bruce Buyer, a married man, as his sole and separate property.

CO-OWNERSHIP

Title to property owned by two or more persons may be vested in the following forms:

 

1. Community Property: A form of vesting title to property owned by husband and wife during their marriage which they intend to own together. Community property is presumed unless otherwise stated. Both spouses must sign all agreements and documents of transfer. Either spouse has the right to dispose of one half of the property (including by will).
   
   Example: Bruce Buyer and Barbara Buyer, husband and wife as community property.
   
2. Joint Tenancy: A form of vesting title in two or more persons (married or unmarried) in equal interest, subject to the right of survivorship in the surviving joint tenant(s). Title must be acquired at the same time and by the same conveyance, and the document must expressly declare the intention to create a joint tenancy. Upon the death of a joint tenant, title automatically conveys by operation of law to the survivor(s) and is not subject to disposition by will.
   
   Example: Bruce Buyer and Barbara Buyer, husband and wife as joint tenants.
3. Tenancy in Common: A form of vesting title in any two or more individuals in undivided fractional interests. These interests may be unequal in quantity or duration and may arise at different times. Each co-tenant owns a share, is entitled to a comparable portion of income, and must bear an equivalent share of expenses. Each co-tenant may sell, lease, or will their share of the property.
   
   Example: Bruce Buyer, a single man, as to an undivided 3/4 interest and Penny Purchaser, a single woman, as to an undivided 1/4 interest, as tenants in common.

Other Ways of Vesting Title

1. A Corporation: A legal entity, created under state law, regarded as having an existence and personality separate from its shareholders.
2. A Partnership: An association of two or more persons who carry on business for profit as co-owners. It may hold title to real property in the name of the partnership, governed by the Uniform Partnership Act.
3. As Trustees of A Trust: An arrangement where legal title to a property is transferred by the grantor to a trustee to be managed for the benefit of the beneficiaries specified in the trust agreement.
4. Limited Liability Companies (L.L.C.): A legal entity similar to both a corporation and a partnership. Its existence is separate from its owners. The operating agreement determines how it functions and is taxed.

In cases of corporate, partnership, L.L.C. or trust ownership, required documents may include corporate articles and bylaws, partnership agreements, L.L.C. operating agreement and trust agreements and/or certificates.

 

 Remember: How title is vested has important legal consequences. You may wish to consult an attorney to determine the most advantageous form of ownership for your particular situation.