Understanding Property Titles in California

In legal contexts, names and titles are crucial, especially in property ownership. Here's a detailed breakdown of the key ways to hold title in California:

1. Sole Ownership
   Sole ownership means that an individual or entity has complete control and responsibility for the property. The title is held in their name alone, allowing them to sell, lease, or transfer the property at will. Even married individuals can hold property as sole owners if specified as “separate property.” This form of title would subject the property to probate proceedings.

2. Tenants in Common
   This is the default method of co-ownership in California when multiple people or entities own a property. Each owner has an undivided interest in the property, meaning there is no physical division of the property itself. Ownership shares can vary (e.g., 50-50 or 25-75, or 33-33-67, etc.) and can be sold or transferred independently. When an owner dies, their share passes to their heirs, not the other co-owners. This form of title would subject the property to probate proceedings

3. Joint Tenants
   Joint tenancy involves equal ownership shares with the right of survivorship. This means that when one owner dies, the surviving owners automatically inherits the deceased's share equally. Joint tenants must have equal ownership percentages (e.g., two owners each own 1/2, three owners each own 1/3, four owners each own 1/4, etc.). This form of title would not subject the property to probate proceedings. However, it also could supersede a signed will or other estate planning document. This form of title is not exclusive to married couples, and joint tenancy is NOT synonymous with community property.

4. Community Property
   In California, which is a community property state, property acquired during marriage is typically considered community property. Both spouses on title held as community property equally own the property, and upon the death of one spouse, their share typically passes to the surviving spouse. This ownership method is limited to married couples or registered domestic partners, and it can be further specified as “community property with right of survivorship” to automatically transfer ownership to the surviving spouse. This form of title would not subject the property to probate proceedings.

5. Trustees of a Trust
   When property is held in a trust, the title is in the name of the trustee(s) who manage the property according to the trust’s terms. This allows for more flexible and controlled management of the property, often used in estate planning to avoid probate (in both instances of death or incapacity) and manage the distribution of assets.

Each form of title has both legal and practical implications. Be sure you hold title consistent with your estate planning goals. When circumstances change (i.e., when a co-owner dies), title must be revised to stay current. If you have any questions about how your property is titled and how it fits into your estate plan, feel free to reach out to us for personalized advice.

What's In A Name? - Vesting Title

“What's in a name? That which we call a rose

By any other name would smell as sweet”

This quote, from William Shakespeare’s play Romeo and Juliet, has become somewhat of a cliche when we discuss form over substance.  Sometimes a name doesn’t impact the underlying substance of something. (If you call a rose “monkey,” it’s still going to smell sweet.) However, in a legal context, where words carry significant weight, a name may make all the difference.

The name on a parcel of real estate, or “title”, declares who owns a piece of property, and how those owners own the property. The following are some examples of different ways to hold title in California.

1. Property can be solely owned.

Individual or Entity

If all you see on title is an individual’s name (e.g., “Jane Smith”), or an entity’s name (e.g., “123 Main St., LLC” or “Owner, Inc.”) then that individual or entity holds complete title. There are no co-owners. Note that married individuals may own property individually (e.g., “Jane Smith, a married woman, as her sole and separate property”).

2. Property can have multiple owners, or co-owners.

Tenants in Common

If you see more than one person or entity on title (e.g., “Jane Smith and Cecilia Perez” or “Partners, LLC and Owner, Inc.”) and either a percentage ownership (“as to an undivided 25%”) or no other words, then that is referred to as “tenants in common”. This is the default method for co-ownership in California. It means that all owners have an undivided interest (meaning, there’s no boundary splitting the parcel of property) and that they’re all individually and jointly liable as owners. Each owner has the right to lease or sell their share, and when they die (if it is a person) then the property passes to their heirs.

Joint Tenants

If you see more than one person on title followed by the words “joint tenants” (e.g., “Jane Smith and Cecilia Perez as Joint Tenants”) then that means that all owners have an undivided interest (meaning, there’s no boundary splitting the parcel of property) and that they’re all individually and jointly liable as owners. However, different from Tenants in Common, the co-owners can only own equal interests in the property. A joint tenant may not have a disproportionate interest than any other joint tenant. For example, if two joint tenants own one parcel of property, then they each effectively own half. If three joint tenants, then a third, and so on. The largest benefit to this form of ownership is what is called a “right of survivorship”. This means that when one joint tenant dies, the leftover joint tenants automatically share a proportional interest in the property. For example, if “Jane Smith and Cecilia Perez as Joint Tenants” own a parcel of property, and Jane Smith dies, then Cecilia Perez is the sole owner of the entire parcel, automatically as a matter of law. If three joint tenants, then the remaining two own the property in equal shares. This form of title is only available to individuals and not to entities, since entities do not live a natural life and that right of survivorship could not apply.

Community Property

Anytime you see two names followed by the words “community property” (e.g., “Jane Smith and Cecilia Perez, spouses, as Community Property” or “Jane Smith and Rodrigo Perez, wife and husband, as Community Property”) then that means the owners are married to each other, and they are holding this property as community property. Community property is only available to married couples who reside in community property states (California, and many of the West Coast and Southwestern states) and the property is located in one of those states. Community property can also carry a right of survivorship but the words “right of survivorship” must follow the words “community property” in the title. A married person may hold title as “separate property”. If so, you will see the words “...a married person, as his/her/their separate property” following their name.

Trustee(s) of a Trust

If one or more people own property in the name of a trust, then you will see the trustee name or names, followed by the words “trustee of the [trust name] dated [trust date]”. This means that the property is held in trust and subject to the terms of that trust. (Note: The trustee of a trust can be an individual or multiple people.)

If you have any questions about title to your home with respect to your own estate plan, please contact us.