May 17, 2024 • 27 mins
In this episode of "The Real Estate Connection", your host, Stephen Theard, a certified probate and real estate specialist, unpacks the complex world of property titles and different methods of owning real estate. Stephen highlights the significance and intricacies of how titles work, which can greatly impact future rights of involved parties.
You'll learn practical advice on why determining the manner of title holding is imperative and when it's advisable to consult with a legal counsel for the most beneficial ownership form. Get insights into common methods of holding titles, like sole ownership and co-ownership, including understanding the concept of title vesting for taxes, transferability of title, and exposure to creditor's claims.
Stephen's discussion extends from community property to joint tenancy, tenancy in common and beyond. Hear our host simplify complex real estate jargon and provide clear examples illustrating the differences, advantages, and pitfalls of each property ownership type. This includes considerations on the role of corporations, partnerships, trusts, and limited liability companies in owning property.
Whether you're a first-time homebuyer, seasoned investor or somewhere in between, this episode serves as an essential guide. Tune in to learn from Stephen's expertise on navigating the real estate world, making well-informed decisions, and avoiding unnecessary hazards.
Sponsored by - Good Patriot Realty - A Salute to Home Ownership
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Music.
(00:22):
Time now for The Real Estate Connection with Stephen Thayart,
a realtor and certified probate and real estate specialist.
Whether you're a first-time homebuyer or a seasoned investor looking to downsize,
move up, or refinance, this program is for you. We are a house in the middle of a street.
(00:43):
We can tell you that you've got to make the right call.
From probate sales to landscape design to home repairs and maintenance,
this is your weekly look into all things real estate.
Now your host for The Real Estate Connection, Stephen Thayard.
Hey, everybody. Hey, everybody. Hey, everybody. Welcome to another episode of
(01:08):
The Real Estate Connection brought to you by, where is it?
Ah, there it is. Good Patriot Realty. A salute to home ownership.
This is a trip because I'm actually looking at myself and it's mirrored.
So anyway, for all you listening, you have no idea what I'm talking about.
I'm pointing to the logo on screen.
For those of you who are watching this, either recorded or live,
(01:31):
welcome. Or if you're listening to it, welcome.
Thank you for joining me on another episode of the real estate connection brought
to you by good patriot realty a salute to home ownership hey if you're in the
real estate market right now and you're looking to buy or sell and you're asking
yourself the question is now the time to buy yes,
because prices are not dropping they haven't been dropping and they're not going
(01:53):
to drop however when the interest rates come down.
Prices are going to shoot up and they're going to shoot up quickly.
And there's going to be more competition of buyers in the market.
So you should not wait. If you can get into a house now, you absolutely should do so.
And then when the interest rates come down, you'll already be in your home.
You won't have to compete with anybody else for it. And you have the wonderful
(02:17):
opportunity to refinance and bring that payment down.
The value is going to go up, but your payment is going to go down.
Isn't that a beautiful thing?
Your value is going up because interest rates dropped and your payments are
going to come down. That's a win-win scenario.
Got to love it. Got to love it. And if you're thinking about selling and you're
(02:38):
worried about the same thing, there are buyers in the market who have adjusted
to the interest rates and they absolutely are out there looking.
And here's the thing. There's not enough inventory.
That's the biggest complaint. There may maybe one or two houses in a category,
if that, and they're flying for those buyers who are qualified.
Now, sellers, you're going to have to be creative.
(02:59):
It's a different market. You can get your home sold, but there are going to
be some things that you're not necessarily used to that you didn't have to deal
with in the past that you will absolutely have to deal with today.
So if you want a qualified individual to guide you through the selling or buying
process, Give me, Stephen Thayard, at Good Patriot Realty, a call at 408-472-0817.
(03:21):
And oh, by the way, I'm never too busy for any of your referrals.
So if you have a referral for me, I am not too busy for it. Pass the information along.
You will be blessing me immensely and this business, which I use to feed my
family. Thank you, Lord.
(03:42):
And helping out a friend with a qualified expert in his field to help them navigate
the home buying or home selling process.
So give me again a call at 4 0 8 4 7 2 0 8 1 7.
Without any further ado, we're going to jump right on into the topic of this podcast.
(04:07):
How should you take title or how How should you own real estate when you're buying it?
This question comes up all the time.
It's something that people don't think about going in. It usually comes up towards
the end of the transaction when people are being asked this question,
hey, you're about to buy a house.
(04:28):
How do you want to own it? And they look at you from across the room with this
weird look like, what are you talking about?
Well, there are different ways to hold title,
the title to the property in your name legally or ownership of the property
that have different ramifications depending on how you are owning it,
who you are owning it with or multiples, right?
(04:51):
So we're going to go through this. This is based on an article written on my blog, on my website.
And so I'm just going to kind of read through it. So real property can be incredibly valuable.
It is. And the question of how parties can take ownership of their property is important.
The form of ownership taken, the vesting of title will determine who may sign
(05:15):
various documents involving the property and future rights of the parties to the transaction.
You have rights when you own real estate in the United States of America.
And those rights relate to how you own the title as well.
So these rights involve such matters as the following, real property taxes,
(05:40):
income taxes, inheritance.
Gift taxes, transferability of that title, meaning who you can transfer it to
and how you go about doing it, and exposure to a creditor's claims.
Also, how title is vested can have significant probate implications in the event of death.
(06:02):
I'll just cut straight to the chase on probate, especially if you're in California.
Hear me. Listen to me.
If you own real property in the state of California and you do not have a living
trust and you pass away the property is going to probate that's it that's how
(06:24):
it works if there's no living trust in the state of California.
Even if you just have a will, a written legal will, your property goes to probate.
So if you want to avoid that headache for your heirs, your children,
your grandchildren, absolutely get a living trust in place and stick your property in it.
(06:50):
Doesn't do you any good to have a trust and not actually take the title of your
property and put it in that trust. I've run across many people who have a living
trust and come to find out later on that they never put the deed into the trust.
And so it didn't cover the real estate and it still went into probate.
So two steps, get the trust, put the property in the trust. All right, that covers it.
(07:15):
So the Land Title Association advises those purchasing real estate to give careful
consideration to the manner in which title will be held.
Buyers may wish to consult legal counsel to determine the most advantageous
form of ownership for their particular situation. And situations vary.
(07:36):
You could be buying it on your own. You could be buying it in the middle of a divorce, God forbid.
You could be buying it with a brother or a sister. You could be buying it with a friend or cousin.
You could be buying it as an investment property property with multiple investors
on the ownership, you could have formed some sort of corporation for investing
(07:58):
in real estate and you need to put the title you're purchasing as a corporation.
There's just all sorts of scenarios beyond your traditional either husband and
wife buying a house together or a single male or a single female.
All right. So we have to keep that in mind.
The land title association has provided
(08:19):
the following definitions of common vesting or holding
title as an informational overview right so
this is information for you and it's an overview consumers should not rely on
these as legal definitions that's my caveat i am not an attorney i am providing
this information as general information if you want to nail it down,
(08:42):
consult with a real estate attorney,
or you can call a title company, right? That's what we do.
We call title companies because that's what they do all day long is they.
Put together titles for property deeds, file them with different counties and
jurisdictions, and it's all legal stuff.
They have a very good knowledge of what different title means as far as how it affects your rights.
(09:07):
And so you can shortcut going to an attorney by calling a title company.
And if you want name of a representative that I trust in regards to title,
give me a call. Stephen Thayard at Good Patriot Realty, 408-472-0817.
Again, 408-472-0817. I will definitely point you in the right direction in regards
(09:33):
to who you could get this information from. All right.
Just to shortcut the whole going to an attorney for spending a lot of money, right?
Because they have this expertise. This is what they do every single day.
All right, so here are the common methods of holding title.
Sole ownership. All right, that's number one. Sole ownership as an individual.
(09:55):
So sole ownership may be described as ownership by an individual or other entity
capable of acquiring title. Interesting, entity.
That's the United States of America. Corporations, partnerships,
LLCs. Maybe not a partnership. We may be getting ahead of ourselves.
But corporations, limited liability companies. All right.
So, examples of common vesting in cases of sole ownership are a single man or
(10:21):
woman, a man or woman who has not been legally married, for example...
Anybody who's just never been married before and they buy a house, all right?
An unmarried man or woman, which is a man or woman who was previously married
and now legally divorced, God forbid, all right?
So that would be somebody who maybe has gone through the unfortunate pathway of divorce.
(10:46):
I wish I had somber music for that, but I don't.
And now they're on their own and they're buying a house on their own.
They would be called an unmarried man or woman.
There is also a married man or woman as his or her sole and separate property.
So in the state of California, right, you can purchase a house as a married
(11:09):
person and then have it as your sole property.
Of course, you have to work that all out with your spouse.
I'd like to be on that conversation, but there are reasons why it comes up.
We won't get into here, but it happens, right?
And both parties are okay with it and that's what they roll with.
So a married man or woman who wishes to acquire title in his or her name.
(11:31):
So the title company insuring title will require the spouse of the married man
or woman acquiring title to specifically disclaim or relinquish his or her right
title or an interest to the property.
This establishes that it is the desire of both spouses that title to the property
(11:53):
be granted to one spouse as that spouse's sole and separate property. Okay.
That's how you do it. You have to get permission and the person has to actively
sign their rights away to the property, sign a document.
So it's not something that you can just go and do on your own without your your
(12:14):
spouse's knowledge, God forbid.
However, it is possible with the knowledge of both spouses.
And again, there are many reasons why this pops up and it's done not as frequently
as you might think, but it is done.
So that's sole ownership.
Now we're going to get into co-ownership.
Co-ownership. Title to property owned by two or more persons may be vested in the following forms.
(12:40):
They are one, community property, two, joint tenancy, and three, tenancy in common.
So we're going to run through the definitions of all three of those.
All right. First one is community property, which relates to people being married.
So a form of vesting title to property owned by husband and wife during their
(13:04):
marriage, which they intend to own together.
Community property is distinguished from separate property, which is property
acquired before marriage by separate gift or bequest beforehand.
After legal separation or which is agreed to be owned only by one spouse.
Real property conveyed to a married man or woman is presumed to be community
(13:28):
property unless otherwise stated.
Since all such property is owned equally, husband and wife must sign all agreements
and documents of transfer.
That means it's a joint decision in a marriage as community property.
Under community property, either spouse has the right to dispose of one half
(13:49):
of the community property, including transfers by will.
For example, Bruce Byer and Barbara Byer, husband and wife, as community property.
All right, so that's basically how it is.
If you're married, community property, that's the way you can hold title,
but it has to be marriage.
All right, now we're going to jump into the definition of joint tenancy.
(14:13):
That is a form of vesting title to property owned by two or more persons who
may or may not be married.
So this is for people who aren't, who could be married or not be married.
So brother and sister, a couple of friends getting together.
I just had a conversation with a couple of young men looking to buy a house.
They're friends. So they could own this property in joint tenancy because obviously
(14:34):
they're not married. All right.
Again, not, not to be married in equal interest subject to the right of survivorship
if the surviving in the surviving joint tenant.
So title must have been acquired at the same time, meaning they,
They both are buying it at the same time together by the same conveyance,
(14:55):
and the document must expressly declare the intention to create a joint tenancy estate.
When a joint tenant dies, title to the property is automatically conveyed by
operation of law to the surviving joint tenant.
Therefore, joint tenancy property is not subject to disposition by will.
(15:17):
Okay, so there's a lot there.
Basically, if two people come together and buy a property in joint tenancy,
if one person dies, then their share of the property automatically goes to the
other person that's still alive.
Right? So that's joint tenancy. And that could be two or more people according to this definition.
(15:38):
So how it goes back and forth after people die, have that discussion with the
title company. I remember studying this when I was getting my broker's license
and right now it is not fresh in my memory.
However, if you have a question for me,
I would be happy to dig out my broker books and look this information up or
(16:02):
better yet, call my title company representative and run through the scenario
no matter what it is for you specifically.
Give me a call, Stephen Thayard at 408-472-0817.
Again, 408-472-0817.
All right, number three, tenancy in common, a form of vesting title to property
(16:23):
owned by any two or more individuals in undivided fractional interests.
These fractional interests may be unequal in quantity or duration and may arise at different times.
Each tenant in common owns a share of the property, is entitled to a comparable
(16:45):
portion of the income from the property, and must bear an equivalent share of expenses.
Each co-tenant may sell, lease, or will to his or her heir that share of the
property belonging to him or her.
For example, Bruce Buyer, a single man, as to an undivided three-quarter interest,
(17:07):
and Penny Purchaser, a single woman, as to an undivided one-quarter interest as tenants in common.
So this is where you can get lots of people on the title and slice up the pie
any way way you want it, as long as it equals 100%, right?
So you may have five or six people investing in an investment property.
(17:28):
One guy puts down more money, so he gets 50%. Another guy puts down a little
bit more money, so they get 25% and 25%, as long as it equals 100, right?
You can slice and dice this thing up, and then you have rights to your tenancy in common.
You can sell off your piece to somebody and they can step into your role.
And it just provides a lot of different flexibility in ownership and how people
(17:49):
come to the table in purchasing the property.
So if you're looking to pool your money as investors in homes,
this is a great way to do it, tenancy in common.
And then it's in writing how much each person has and how they can dispose of it.
However, if you're getting into flipping houses and you all are in it together
and you want to all sell it together at the same time.
(18:11):
You may want to have a background agreement on how that's going to how that's
going to fly because somebody might get nervous and want to jump ship early
and then you got all kinds of problems. All right. So.
This is just information and it's food for thought, depending on your particular
situation and what you're trying to do with real estate.
Lots of different things you can do with real estate in regards to holding it,
(18:35):
investing in it, using it to produce income or to flip it to produce more income.
So again, these are just different ways that you can hold title.
All right. So there are other ways of vesting and of holding title as well.
A corporation can hold title, confirmed now. A partnership can hold title to property.
(19:00):
As a trustee of a trust and limited liability, corporations can own title to
real property or real estate in the United States of America.
So, let's dig into a corporation.
A corporation is a legal entity. It's considered a person, right?
It's odd, but these are legal terms.
(19:22):
This is how business is done in the United States of America.
You can go out and form a corporation.
It can be private or public. We know these public corporations that you can
buy stock. That's the stock market.
But you can also have a corporation that's privately owned. It is not public.
You're not selling stock in it, but it still is a corporation.
A corporation is a legal entity created under state law consisting of one or more shareholders,
(19:46):
but regarded under law as having an existence and personality separate from such shareholders.
Story. Used to work in public accounting and there were sales tax laws.
And when you're dealing with major corporations selling big pieces of machinery
and equipment, sales tax is a lot of money.
(20:07):
If you can imagine you're Intel or chip manufacturer and you have this giant
machine that manufactures microchips for sale and it can be $15 million. dollars.
And you want to sell it, right? But the guy who's buying it's like,
that's a lot of sales tax on $15 million.
What you can do is you can form a corporation and you can transfer that asset into a new corporation.
(20:34):
Then you can sell the shares of that corporation to another party who then owns
that corporation where the asset is sitting. It's not illegal.
You've just moved the asset out of one corporation to another corporation and
then sold the shares of this corporation or ownership of the corporation to another party.
And all of a sudden, there's no sales tax, right?
(20:57):
So corporations have all sorts of different vehicles and things that you can
do in order to move property around, right?
So you can buy a house through a corporation.
The corporation would own the property, but the shareholders who control the
corporation are separate from the corporation itself.
Now the corporation is taxed on income.
(21:18):
And if the corporation buys a piece of equipment, they would own tax,
but there's, there was a legal loophole. So don't hold me to it.
I'm not giving tax advice, but there was a legal loophole when you first start
a corporation because it doesn't really have any value and the stock doesn't have any value.
And so there was this little sliver of a loophole out there.
Those loopholes could be closed.
(21:39):
And so I don't want you guys taking my tax advice and going out and trying to do that.
But in the past, I remember for certain states and certain situations,
there was this little loophole.
Again, caveat, I am not a practicing CPA and I'm not an attorney.
It's something that was done in the past under supervision of CPAs and attorneys.
(22:02):
And it was advice that needed to to be reviewed by legal lawyers, licensed attorneys.
And so again, caveat, I'm not an attorney and that's not legal advice or tax advice. Not tax advice.
Did I say that again? Not tax advice. I'm not a CPA.
All right. Okay. Moving right along. A partnership.
(22:24):
A partnership is an association of two or more persons who can carry on business
for profit as co-owners, As governed by the Uniform Partnership Act,
a partnership may hold title to real property in the name of the partnership.
All right, so that's the same thing. Corporation is another entity.
Partnership's another entity that can hold title in real estate.
(22:48):
As a trustee of a trust. So a trust is an arrangement whereby legal title to
property is transferred by the grantor to a person called a trustee to be held
and managed by that person for the benefit of the people specified in the trust
agreement called the beneficiaries.
(23:09):
There's a lot going on with trusts and trustees.
Again, if you want more detailed advice concerning how this all works.
Do some research yourself on the internet.
Consult with an attorney. Consult with a title company.
But the information is out there. This is just a starting point for you to start with. All right.
(23:33):
Last but not least, a limited liability company.
This form of ownership is a legal entity and is similar to both the corporation and the partnership.
The operating agreement will determine how the LLC functions and is taxed.
Like the corporation, its existence is separate from its owners.
(23:57):
All right, so here's the big asterisk, the big asterisk.
In cases of corporate, partnership, LLC, or trust ownership,
required documents may include corporate articles and bylaws,
partnership agreements, LLC operating agreement and trust agreements and or certificates.
(24:21):
That's the big asterisk. So even though you can hold title with these entities,
there's a lot more paperwork.
There's a lot more documentation and a lot more support that needs to be provided.
It's just more work. It doesn't mean that you can't do it.
It just means that there's more legal hoops that you have to jump through in
order to do it appropriately and correctly.
(24:42):
All right. So the remember at the end of this article is 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.
(25:03):
I'm going to read that again.
How title is vested has important legal consequences.
You may wish to consult with an attorney to determine the most advantageous
form of ownership for your particular situation.
And that's it. Again, legal caveat.
(25:27):
You want advice, legal advice to make sure that you're doing what's appropriate
for your particular situation, consult an attorney.
If you would like Like information from people who work in this arena of life
on a daily basis, call a title company.
(25:47):
They will give you lots of good information because they work in the nuts and bolts of it every day.
And if you would like a recommendation on a person within a title company to speak to
specifically give me, Stephen Thayard, a call at 408-472-0817.
(26:13):
And I will be happy to point you in the right direction. Again,
I'm not an attorney, not giving any legal advice or any tax advice.
However, I will leave you with this advice.
Be strong and courageous. Do not be afraid. Do not be discouraged.
For the Lord your God will be with you wherever you go.
(26:36):
Joshua 1.9. God bless you.
God bless the United States of America.
Have a fantastic rest of whatever you are doing, and we will see you next time
on another episode of The Real Estate Connection, brought to you by Good Patriot Realty.
(26:58):
A salute to home ownership.
This has been The Real Estate Connection with realtor and certified probate
and real estate Real estate specialist, Stephen Thayard.
Licensed Calbre number 017-00019.
For more information on this program, visit realestateconnectionradio.com.
(27:18):
To contact Stephen directly, call 408-472-0817 or email info at realestateconnectionradio.com.
And be sure to tune in next week at this time for The Real Estate Connection.
Music.
Music.
(00:22):
Time now for The Real Estate Connection with Stephen Thayart,
a realtor and certified probate and real estate specialist.
Whether you're a first-time homebuyer or a seasoned investor looking to downsize,
move up, or refinance, this program is for you. We are a house in the middle of a street.
(00:43):
We can tell you that you've got to make the right call.
From probate sales to landscape design to home repairs and maintenance,
this is your weekly look into all things real estate.
Now your host for The Real Estate Connection, Stephen Thayard.
Hey, everybody. Hey, everybody. Hey, everybody. Welcome to another episode of
(01:08):
The Real Estate Connection brought to you by, where is it?
Ah, there it is. Good Patriot Realty. A salute to home ownership.
This is a trip because I'm actually looking at myself and it's mirrored.
So anyway, for all you listening, you have no idea what I'm talking about.
I'm pointing to the logo on screen.
For those of you who are watching this, either recorded or live,
(01:31):
welcome. Or if you're listening to it, welcome.
Thank you for joining me on another episode of the real estate connection brought
to you by good patriot realty a salute to home ownership hey if you're in the
real estate market right now and you're looking to buy or sell and you're asking
yourself the question is now the time to buy yes,
because prices are not dropping they haven't been dropping and they're not going
(01:53):
to drop however when the interest rates come down.
Prices are going to shoot up and they're going to shoot up quickly.
And there's going to be more competition of buyers in the market.
So you should not wait. If you can get into a house now, you absolutely should do so.
And then when the interest rates come down, you'll already be in your home.
You won't have to compete with anybody else for it. And you have the wonderful
(02:17):
opportunity to refinance and bring that payment down.
The value is going to go up, but your payment is going to go down.
Isn't that a beautiful thing?
Your value is going up because interest rates dropped and your payments are
going to come down. That's a win-win scenario.
Got to love it. Got to love it. And if you're thinking about selling and you're
(02:38):
worried about the same thing, there are buyers in the market who have adjusted
to the interest rates and they absolutely are out there looking.
And here's the thing. There's not enough inventory.
That's the biggest complaint. There may maybe one or two houses in a category,
if that, and they're flying for those buyers who are qualified.
Now, sellers, you're going to have to be creative.
(02:59):
It's a different market. You can get your home sold, but there are going to
be some things that you're not necessarily used to that you didn't have to deal
with in the past that you will absolutely have to deal with today.
So if you want a qualified individual to guide you through the selling or buying
process, Give me, Stephen Thayard, at Good Patriot Realty, a call at 408-472-0817.
(03:21):
And oh, by the way, I'm never too busy for any of your referrals.
So if you have a referral for me, I am not too busy for it. Pass the information along.
You will be blessing me immensely and this business, which I use to feed my
family. Thank you, Lord.
(03:42):
And helping out a friend with a qualified expert in his field to help them navigate
the home buying or home selling process.
So give me again a call at 4 0 8 4 7 2 0 8 1 7.
Without any further ado, we're going to jump right on into the topic of this podcast.
(04:07):
How should you take title or how How should you own real estate when you're buying it?
This question comes up all the time.
It's something that people don't think about going in. It usually comes up towards
the end of the transaction when people are being asked this question,
hey, you're about to buy a house.
(04:28):
How do you want to own it? And they look at you from across the room with this
weird look like, what are you talking about?
Well, there are different ways to hold title,
the title to the property in your name legally or ownership of the property
that have different ramifications depending on how you are owning it,
who you are owning it with or multiples, right?
(04:51):
So we're going to go through this. This is based on an article written on my blog, on my website.
And so I'm just going to kind of read through it. So real property can be incredibly valuable.
It is. And the question of how parties can take ownership of their property is important.
The form of ownership taken, the vesting of title will determine who may sign
(05:15):
various documents involving the property and future rights of the parties to the transaction.
You have rights when you own real estate in the United States of America.
And those rights relate to how you own the title as well.
So these rights involve such matters as the following, real property taxes,
(05:40):
income taxes, inheritance.
Gift taxes, transferability of that title, meaning who you can transfer it to
and how you go about doing it, and exposure to a creditor's claims.
Also, how title is vested can have significant probate implications in the event of death.
(06:02):
I'll just cut straight to the chase on probate, especially if you're in California.
Hear me. Listen to me.
If you own real property in the state of California and you do not have a living
trust and you pass away the property is going to probate that's it that's how
(06:24):
it works if there's no living trust in the state of California.
Even if you just have a will, a written legal will, your property goes to probate.
So if you want to avoid that headache for your heirs, your children,
your grandchildren, absolutely get a living trust in place and stick your property in it.
(06:50):
Doesn't do you any good to have a trust and not actually take the title of your
property and put it in that trust. I've run across many people who have a living
trust and come to find out later on that they never put the deed into the trust.
And so it didn't cover the real estate and it still went into probate.
So two steps, get the trust, put the property in the trust. All right, that covers it.
(07:15):
So the Land Title Association advises those purchasing real estate to give careful
consideration to the manner in which title will be held.
Buyers may wish to consult legal counsel to determine the most advantageous
form of ownership for their particular situation. And situations vary.
(07:36):
You could be buying it on your own. You could be buying it in the middle of a divorce, God forbid.
You could be buying it with a brother or a sister. You could be buying it with a friend or cousin.
You could be buying it as an investment property property with multiple investors
on the ownership, you could have formed some sort of corporation for investing
(07:58):
in real estate and you need to put the title you're purchasing as a corporation.
There's just all sorts of scenarios beyond your traditional either husband and
wife buying a house together or a single male or a single female.
All right. So we have to keep that in mind.
The land title association has provided
(08:19):
the following definitions of common vesting or holding
title as an informational overview right so
this is information for you and it's an overview consumers should not rely on
these as legal definitions that's my caveat i am not an attorney i am providing
this information as general information if you want to nail it down,
(08:42):
consult with a real estate attorney,
or you can call a title company, right? That's what we do.
We call title companies because that's what they do all day long is they.
Put together titles for property deeds, file them with different counties and
jurisdictions, and it's all legal stuff.
They have a very good knowledge of what different title means as far as how it affects your rights.
(09:07):
And so you can shortcut going to an attorney by calling a title company.
And if you want name of a representative that I trust in regards to title,
give me a call. Stephen Thayard at Good Patriot Realty, 408-472-0817.
Again, 408-472-0817. I will definitely point you in the right direction in regards
(09:33):
to who you could get this information from. All right.
Just to shortcut the whole going to an attorney for spending a lot of money, right?
Because they have this expertise. This is what they do every single day.
All right, so here are the common methods of holding title.
Sole ownership. All right, that's number one. Sole ownership as an individual.
(09:55):
So sole ownership may be described as ownership by an individual or other entity
capable of acquiring title. Interesting, entity.
That's the United States of America. Corporations, partnerships,
LLCs. Maybe not a partnership. We may be getting ahead of ourselves.
But corporations, limited liability companies. All right.
So, examples of common vesting in cases of sole ownership are a single man or
(10:21):
woman, a man or woman who has not been legally married, for example...
Anybody who's just never been married before and they buy a house, all right?
An unmarried man or woman, which is a man or woman who was previously married
and now legally divorced, God forbid, all right?
So that would be somebody who maybe has gone through the unfortunate pathway of divorce.
(10:46):
I wish I had somber music for that, but I don't.
And now they're on their own and they're buying a house on their own.
They would be called an unmarried man or woman.
There is also a married man or woman as his or her sole and separate property.
So in the state of California, right, you can purchase a house as a married
(11:09):
person and then have it as your sole property.
Of course, you have to work that all out with your spouse.
I'd like to be on that conversation, but there are reasons why it comes up.
We won't get into here, but it happens, right?
And both parties are okay with it and that's what they roll with.
So a married man or woman who wishes to acquire title in his or her name.
(11:31):
So the title company insuring title will require the spouse of the married man
or woman acquiring title to specifically disclaim or relinquish his or her right
title or an interest to the property.
This establishes that it is the desire of both spouses that title to the property
(11:53):
be granted to one spouse as that spouse's sole and separate property. Okay.
That's how you do it. You have to get permission and the person has to actively
sign their rights away to the property, sign a document.
So it's not something that you can just go and do on your own without your your
(12:14):
spouse's knowledge, God forbid.
However, it is possible with the knowledge of both spouses.
And again, there are many reasons why this pops up and it's done not as frequently
as you might think, but it is done.
So that's sole ownership.
Now we're going to get into co-ownership.
Co-ownership. Title to property owned by two or more persons may be vested in the following forms.
(12:40):
They are one, community property, two, joint tenancy, and three, tenancy in common.
So we're going to run through the definitions of all three of those.
All right. First one is community property, which relates to people being married.
So a form of vesting title to property owned by husband and wife during their
(13:04):
marriage, which they intend to own together.
Community property is distinguished from separate property, which is property
acquired before marriage by separate gift or bequest beforehand.
After legal separation or which is agreed to be owned only by one spouse.
Real property conveyed to a married man or woman is presumed to be community
(13:28):
property unless otherwise stated.
Since all such property is owned equally, husband and wife must sign all agreements
and documents of transfer.
That means it's a joint decision in a marriage as community property.
Under community property, either spouse has the right to dispose of one half
(13:49):
of the community property, including transfers by will.
For example, Bruce Byer and Barbara Byer, husband and wife, as community property.
All right, so that's basically how it is.
If you're married, community property, that's the way you can hold title,
but it has to be marriage.
All right, now we're going to jump into the definition of joint tenancy.
(14:13):
That is a form of vesting title to property owned by two or more persons who
may or may not be married.
So this is for people who aren't, who could be married or not be married.
So brother and sister, a couple of friends getting together.
I just had a conversation with a couple of young men looking to buy a house.
They're friends. So they could own this property in joint tenancy because obviously
(14:34):
they're not married. All right.
Again, not, not to be married in equal interest subject to the right of survivorship
if the surviving in the surviving joint tenant.
So title must have been acquired at the same time, meaning they,
They both are buying it at the same time together by the same conveyance,
(14:55):
and the document must expressly declare the intention to create a joint tenancy estate.
When a joint tenant dies, title to the property is automatically conveyed by
operation of law to the surviving joint tenant.
Therefore, joint tenancy property is not subject to disposition by will.
(15:17):
Okay, so there's a lot there.
Basically, if two people come together and buy a property in joint tenancy,
if one person dies, then their share of the property automatically goes to the
other person that's still alive.
Right? So that's joint tenancy. And that could be two or more people according to this definition.
(15:38):
So how it goes back and forth after people die, have that discussion with the
title company. I remember studying this when I was getting my broker's license
and right now it is not fresh in my memory.
However, if you have a question for me,
I would be happy to dig out my broker books and look this information up or
(16:02):
better yet, call my title company representative and run through the scenario
no matter what it is for you specifically.
Give me a call, Stephen Thayard at 408-472-0817.
Again, 408-472-0817.
All right, number three, tenancy in common, a form of vesting title to property
(16:23):
owned by any two or more individuals in undivided fractional interests.
These fractional interests may be unequal in quantity or duration and may arise at different times.
Each tenant in common owns a share of the property, is entitled to a comparable
(16:45):
portion of the income from the property, and must bear an equivalent share of expenses.
Each co-tenant may sell, lease, or will to his or her heir that share of the
property belonging to him or her.
For example, Bruce Buyer, a single man, as to an undivided three-quarter interest,
(17:07):
and Penny Purchaser, a single woman, as to an undivided one-quarter interest as tenants in common.
So this is where you can get lots of people on the title and slice up the pie
any way way you want it, as long as it equals 100%, right?
So you may have five or six people investing in an investment property.
(17:28):
One guy puts down more money, so he gets 50%. Another guy puts down a little
bit more money, so they get 25% and 25%, as long as it equals 100, right?
You can slice and dice this thing up, and then you have rights to your tenancy in common.
You can sell off your piece to somebody and they can step into your role.
And it just provides a lot of different flexibility in ownership and how people
(17:49):
come to the table in purchasing the property.
So if you're looking to pool your money as investors in homes,
this is a great way to do it, tenancy in common.
And then it's in writing how much each person has and how they can dispose of it.
However, if you're getting into flipping houses and you all are in it together
and you want to all sell it together at the same time.
(18:11):
You may want to have a background agreement on how that's going to how that's
going to fly because somebody might get nervous and want to jump ship early
and then you got all kinds of problems. All right. So.
This is just information and it's food for thought, depending on your particular
situation and what you're trying to do with real estate.
Lots of different things you can do with real estate in regards to holding it,
(18:35):
investing in it, using it to produce income or to flip it to produce more income.
So again, these are just different ways that you can hold title.
All right. So there are other ways of vesting and of holding title as well.
A corporation can hold title, confirmed now. A partnership can hold title to property.
(19:00):
As a trustee of a trust and limited liability, corporations can own title to
real property or real estate in the United States of America.
So, let's dig into a corporation.
A corporation is a legal entity. It's considered a person, right?
It's odd, but these are legal terms.
(19:22):
This is how business is done in the United States of America.
You can go out and form a corporation.
It can be private or public. We know these public corporations that you can
buy stock. That's the stock market.
But you can also have a corporation that's privately owned. It is not public.
You're not selling stock in it, but it still is a corporation.
A corporation is a legal entity created under state law consisting of one or more shareholders,
(19:46):
but regarded under law as having an existence and personality separate from such shareholders.
Story. Used to work in public accounting and there were sales tax laws.
And when you're dealing with major corporations selling big pieces of machinery
and equipment, sales tax is a lot of money.
(20:07):
If you can imagine you're Intel or chip manufacturer and you have this giant
machine that manufactures microchips for sale and it can be $15 million. dollars.
And you want to sell it, right? But the guy who's buying it's like,
that's a lot of sales tax on $15 million.
What you can do is you can form a corporation and you can transfer that asset into a new corporation.
(20:34):
Then you can sell the shares of that corporation to another party who then owns
that corporation where the asset is sitting. It's not illegal.
You've just moved the asset out of one corporation to another corporation and
then sold the shares of this corporation or ownership of the corporation to another party.
And all of a sudden, there's no sales tax, right?
(20:57):
So corporations have all sorts of different vehicles and things that you can
do in order to move property around, right?
So you can buy a house through a corporation.
The corporation would own the property, but the shareholders who control the
corporation are separate from the corporation itself.
Now the corporation is taxed on income.
(21:18):
And if the corporation buys a piece of equipment, they would own tax,
but there's, there was a legal loophole. So don't hold me to it.
I'm not giving tax advice, but there was a legal loophole when you first start
a corporation because it doesn't really have any value and the stock doesn't have any value.
And so there was this little sliver of a loophole out there.
Those loopholes could be closed.
(21:39):
And so I don't want you guys taking my tax advice and going out and trying to do that.
But in the past, I remember for certain states and certain situations,
there was this little loophole.
Again, caveat, I am not a practicing CPA and I'm not an attorney.
It's something that was done in the past under supervision of CPAs and attorneys.
(22:02):
And it was advice that needed to to be reviewed by legal lawyers, licensed attorneys.
And so again, caveat, I'm not an attorney and that's not legal advice or tax advice. Not tax advice.
Did I say that again? Not tax advice. I'm not a CPA.
All right. Okay. Moving right along. A partnership.
(22:24):
A partnership is an association of two or more persons who can carry on business
for profit as co-owners, As governed by the Uniform Partnership Act,
a partnership may hold title to real property in the name of the partnership.
All right, so that's the same thing. Corporation is another entity.
Partnership's another entity that can hold title in real estate.
(22:48):
As a trustee of a trust. So a trust is an arrangement whereby legal title to
property is transferred by the grantor to a person called a trustee to be held
and managed by that person for the benefit of the people specified in the trust
agreement called the beneficiaries.
(23:09):
There's a lot going on with trusts and trustees.
Again, if you want more detailed advice concerning how this all works.
Do some research yourself on the internet.
Consult with an attorney. Consult with a title company.
But the information is out there. This is just a starting point for you to start with. All right.
(23:33):
Last but not least, a limited liability company.
This form of ownership is a legal entity and is similar to both the corporation and the partnership.
The operating agreement will determine how the LLC functions and is taxed.
Like the corporation, its existence is separate from its owners.
(23:57):
All right, so here's the big asterisk, the big asterisk.
In cases of corporate, partnership, LLC, or trust ownership,
required documents may include corporate articles and bylaws,
partnership agreements, LLC operating agreement and trust agreements and or certificates.
(24:21):
That's the big asterisk. So even though you can hold title with these entities,
there's a lot more paperwork.
There's a lot more documentation and a lot more support that needs to be provided.
It's just more work. It doesn't mean that you can't do it.
It just means that there's more legal hoops that you have to jump through in
order to do it appropriately and correctly.
(24:42):
All right. So the remember at the end of this article is 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.
(25:03):
I'm going to read that again.
How title is vested has important legal consequences.
You may wish to consult with an attorney to determine the most advantageous
form of ownership for your particular situation.
And that's it. Again, legal caveat.
(25:27):
You want advice, legal advice to make sure that you're doing what's appropriate
for your particular situation, consult an attorney.
If you would like Like information from people who work in this arena of life
on a daily basis, call a title company.
(25:47):
They will give you lots of good information because they work in the nuts and bolts of it every day.
And if you would like a recommendation on a person within a title company to speak to
specifically give me, Stephen Thayard, a call at 408-472-0817.
(26:13):
And I will be happy to point you in the right direction. Again,
I'm not an attorney, not giving any legal advice or any tax advice.
However, I will leave you with this advice.
Be strong and courageous. Do not be afraid. Do not be discouraged.
For the Lord your God will be with you wherever you go.
(26:36):
Joshua 1.9. God bless you.
God bless the United States of America.
Have a fantastic rest of whatever you are doing, and we will see you next time
on another episode of The Real Estate Connection, brought to you by Good Patriot Realty.
(26:58):
A salute to home ownership.
This has been The Real Estate Connection with realtor and certified probate
and real estate Real estate specialist, Stephen Thayard.
Licensed Calbre number 017-00019.
For more information on this program, visit realestateconnectionradio.com.
(27:18):
To contact Stephen directly, call 408-472-0817 or email info at realestateconnectionradio.com.
And be sure to tune in next week at this time for The Real Estate Connection.
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