At some point, you may decide to co-own property with a spouse, adult child, business partner, or someone else. If so, it is crucial that you title the property correctly because the way in which jointly owned property is titled will impact several important areas of your life. To elaborate, the Los Angeles estate planning attorneys at Schomer Law Group, APC explain the different types of joint ownership in California.
Co-Owning Property in California
State law governs joint ownership of real property, meaning each state may offer different types of joint ownership. In the State of California, title to real property held by co-owners may be held in the following ways:
- Tenancy in Common. A tenancy in common may be created by two or more persons or entities. Marriage is not required to own property as tenants in common. Ownership may be divided into equal or unequal shares; however, the law will assume they are equal unless otherwise specified. Each owner may transfer, convey, or encumber their interest separately without the consent of the other owners. This aspect of a tenancy in common is important to remember as it means that your co-owner could sell his/her interest to anyone. More importantly, your co-owner could cause a lien to be placed against the property or could use his/her share in the property as collateral for a loan. Fortunately, unless the owners are married, or are registered domestic partners, a co-owner’s interest is not subject to liens of another owner; however, a forced sale could occur. Upon the death of one owner, that owner’s interest passes to beneficiaries or heirs during probate, meaning ownership does not pass automatically as is the case with other types of joint ownership. Tenancy in common is the default type of joint ownership in California, meaning if the title documents fail to specify the type of joint ownership a tenancy in common is created.
- Joint Tenancy. A joint tenancy may be created by two or more persons or entities. Marriage is not required to create a joint tenancy. Ownership interests are equal, and the ownership document must specify joint tenancy. Each owner may transfer his/her interest separately but if one owner transfers his/her interest it results in a tenancy in common after the transfer. A co-owner’s interest is not subject to liens of another owner; however, a forced sale could occur prior to the death of a co-owner. Upon the death of one co-owner, that owner’s interest automatically passes to other owners through the “right of survivorship.”
- Community Property. For this type of joint title to be created the co-owners must be spouses or registered domestic partners. Ownership shares are equal and both owners must consent to transfer or encumber the property. The entire property may be subject to a forced sale to satisfy a debt of either spouse or domestic partner. Upon death, an owner’s half interest passes to the spouse/domestic partner unless otherwise specified in a Will.
As you can see, the type of joint property you choose will determine whether or not the co-owners can sell/encumber the property, whether creditors of an owner can get to the property, and what happens to an owner’s interest in the property after death.
Contact Los Angeles Estate Planning Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about how to title jointly owned property in California, contact the experienced Los Angeles estate planning attorneys at Schomer Law Group APCby calling (310) 337-7696 to schedule an appointment.