It’s hard to wrap your head around all the things you need to learn and truly understand when it comes to buying a home. That being said, let’s talk about Title and Vesting.
There’s a difference between Title and Vesting. The title refers to the actual ownership of the property, and vesting refers to how owners hold title to the property. In other words, vesting can change the owner’s ability to encumber, sell, or will their interest in a property. It also determines what an owner can do with their property in their lifetime, and after.
Title vesting is simply taking ownership and the official rights of the title on a property. It is necessary when more than one individual appears as the property owner on the title. When more than one person owns a piece of real estate in California, the title is held either as tenancy in common, joint tenancy, or community property.
How you hold vesting is dependent on certain factors:
1. Are you married?
2. Do you share ownership equally with another individual?
3. Are you going to share ownership in the property based on the financial contribution of each person?
In California, the different vesting options available for co-ownership of property are:
Community Property: This type of vesting is applicable when a property is owned equally by married persons. Property owned by a married person is presumed community property unless otherwise stated. Each owner can dispose of their half of the property by will.
Community Property with Right of Survivorship: This type of vesting is also applicable when a property is owned equally by a married couple. The vesting is the same as community property described above but adds the right of survivorship. This means that when one spouse dies, their half interest transfers to the surviving spouse.
Joint Tenancy: This type of vesting applies when a property is owned by more than one person who may or may not be married. Each owner has an equal interest in the property. It also provides the right of survivorship in the surviving joint tenant(s), as long as title was acquired at the same time, by the same conveyance, and the document must expressly declare the intention to create a joint tenancy estate.
Tenancy in Common: This type of vesting is for property owned by two or more persons with unequal ownership (fractional interests). Each owner may sell, lease, or transfer their share of the property.
We always recommend consulting with a trust attorney to see which vesting option fits best for your needs. Ideally setting up a revocable living trust and transferring the property to the trust is the best way to create a barrier of asset protection for your real estate and personal assets.
If you have any questions regarding the way a property is vested (as it holds legal and tax implications for property owners) we encourage you to reach out to us at (760) 930-0569 so we can assist you further.