Real Estate Corner: Ways to Take Title in Arizona
When you close escrow on a property, you’ll need to choose how you wish to hold title on your purchase. Here in Arizona, there are several ways to hold title. This is an important decision for you, as the way you hold title can affect many things such as the taxes you’ll pay, estate planning, and protection from probate or creditors. Here, we highlight some of the ways title can be configured. Let us know if you have any questions, and always consult your tax advisor or attorney before you choose how you’ll take title on your new property.
Community Property– This option is only for married couples. Each spouse holds an undivided one-half interest in the property. Each spouse may provide by will for the disposition of his or her community interest in the community real property. However, Arizona community property law requires signatures from both spouses to convey or encumber.
Community Property with Right of Survivorship– This is another way for a married couple to hold title to real property. The advantage here is that the estate passes to the surviving spouse outside of probate and no court action is required to “clear” title upon the first death.
Joint Tenancy with Right of Survivorship– Here, the parties involved do not need to be married, and it can include more than two joint tenants. Each joint tenant holds an equal and undivided interest in the estate. One joint tenant may partition the property by selling his or her interest, yet it requires signatures from all to convey or encumber as a whole. Again, the estate passes to surviving tenants outside of probate.
Tenancy in Common– Two or more parties need not be married. Each tenant in common holds an undivided fractional interest in the estate, which can be disproportionate. A tenant in common may transfer his or her undivided interest without destroying the co-tenancy estate. There are no survivorship rights in a tenancy in common, which means that each tenant’s share can be sold or devised to a third party.
Sole and Separate– Sole and separate property is real property owned by a spouse before marriage or real property acquired by a spouse during the marriage by gift, descent or specific intent to hold the title separate from the estate of the marital community. If a married person acquires title as sole and separate property, his or her spouse must execute a disclaimer deed.