Jim Valentine on Real Estate
When you buy real property, you are given title to it. When you “take title” you do so in the name or names that you give the escrow officer to prepare your deed with. These can be you, an individual, you and a spouse, a corporation, etc. This is an area that is usually overlooked in residential real estate until you get near the end of the escrow period.
It is important that you give good consideration to how you want to take title. Let’s consider the names first. You should use your legal name, so you don’t have a problem when you go to sell proving that you are, indeed, the owner of the property. Even a misspelling of your real name can cause you problems. If you have a misspelled name on your deed, be sure to get a correction deed recorded.
If you are buying with someone that you are not married to be very careful. Even when married it can be difficult to unwind property ownership together. Ask anyone who has experienced a confrontational dive. All is good going in when everyone is lovey dovey, but when the wheels come off it can get ugly.
The same applies if you have a fiancé or a significant other in a long-term relationship only you have less claim to one another’s property when things go awry. You might joint venture with a sibling or cousin on a property, but understand, if they get married you could end up with an unexpected and unsolicited partner.
Ideally, you will have the new spouse sign a Quitclaim deed so they can’t claim any ownership, but in the event of a divorce or death you could become partners. That can be problematic if one doesn’t hold up their end of the financial or work obligations associated with the property. You might consider forming a limited liability corporation for your protection and have an agreement about what will happen when one of you passes or wants out.
There are types of title that should be considered and evaluated as to which is best for you and your circumstances. You can take title as tenants in common, joint tenancy, partnership, sole ownership, trust, or corporation. Tenants in common comes in to play if you have difference percentages of ownership, i.e.- 40/60 percent, or if one wants to convey their interest to other parties on their demise rather than have it automatically go to their investment partner. This is important for second marriages if you both have children. You might not want your interest to go to the “other side” instead of to your offspring.
Joint tenancy is for equal interest partners. When one dies their interest automatically goes to the other party. This is great for married couples with common heirs, and saves probate issues, but be sure it is for your circumstances. We call that one the “renewal of your wedding vows” because of the strong consequence positively affecting your spouse or partner when one passes, and most married couples use it.
Trusts are a good way to take title to keep your assets safe for your heirs when you pass. Talk to your lawyer about setting up a trust. You can put things in your trust after you buy, it doesn’t have to happen at the close of escrow. This is a very basic introduction to the topic of title.
Talk with your agent or attorney about what is best for you. There may be aspects of your circumstance that will make one method of taking title better than the rest. Get it right as the stakes are high if you don’t. There can be tax consequences, rightful inheritance problems, etc.
Your agent will have working knowledge about title, but don’t hesitate to call legal counsel if your circumstances have complexity or if you have behavior or attitude issues with your heirs or relatives.
When it comes to choosing professionals to assist you with your Real Estate needs… Experience is Priceless! Jim Valentine, RE/MAX Realty Affiliates, 775-781-3704. dpwtigers@hotmail.com.