Options for How to Hold Title to a Property Deed

Two people shake hands upon completing a real estate transaction

How you get the title to a property will decide the manner in which you are the legal owner of it. The type of title will also impact how real estate is transferred in the event of the death of the original owner. Property title types include sole, joint, or community ownership. Depending on the type of title, those who have a stake in the deal could have new tax issues.

The laws that govern how people own real estate may vary by the state where they reside. Some states restrict the way parties may hold a title.

Learn more about the most common forms of property titles and how they differ. If you're thinking about how to word your title, talk with a lawyer to find out how your state laws and tax status will help decide which title type is the best for you to take.

Sole Owner Title of Deed

People who hold these kinds of titles are the sole owners of the property. Since many couples buy real estate together, these titles will often clearly state whether the owner is single or married.

If a married person wants to hold real estate in his or her name only, they would hold a sole title. The other spouse, who isn't on the title, doesn't share in the rights of future profits but is also not liable for any issues that could come from owning the real estate. In some states, married couples who want to own a piece of real estate as a sole owner must record a quitclaim deed from the spouse who won't own the real estate to the one who will own it.

Joint Tenants Title of Deed With Right of Survivorship

This is also known as a traditional joint tenancy. It bestows an equal share of the real estate to each party who is on the deed. If one party dies, the title transfers to the survivor, no matter what a will might say. Joint tenancy takes four factors.

  1. Time: Each owner must receive a title at the same time.
  2. Title: Each owner must receive the title on the same deed showing title.
  3. Interest: Each person owns the same amount of the real estate.
  4. Possession: Each owner has the same exact right of possession.

If one of the joint tenants sells or conveys the interest created in a joint tenancy to another person, the joint tenancy is broken, and a tenancy in common is created.

The main difference between joint tenancy and tenancy in common is that the latter lacks the right of survivorship. Joint tenants cannot stop another tenant from breaking the joint tenancy.

Tenancy in Common Title of Deed

Tenants in common are all owners, but they may own equal or unequal real estate shares. If one party dies, that person's interest passes to heirs. It is not transferred to the other parties on the deed. Tenants in common share one unity: the right of possession. All tenants in common have the right to be on the property. No person on the deed can exclude others on the deed from being there.

Community Property Title of Deed

This kind of title is often used by married couples. The way the deed is set up depends on the state in which you live. In community property states like Texas, community property titles make both parties equal owners of the real estate. Both parties have the right to sell or will away their interest in the real estate. In separate property states, these titles and ownership laws don't apply.

Title of Deed for Community Property With Right of Survivorship

This type of title combines aspects of community property titles and joint tenancy with right of survivorship titles. If one person dies, that person's share of ownership transfers to the survivor. Since there is a right of survivorship, both signatures are needed to take out a second mortgage, refinance, or sell the home while both parties are alive. Like a joint tenancy with right of survivorship, this type of title does not allow either party to pass their holding to an heir.

Trust Title of Deed

With a trust and transfer title, a trustee owns the real estate, but it is managed for the benefit of the trustor. A trustor is the person who will inherit the real estate. At times, a trustor is named in an attempt to reduce taxes on the estate in the event of death. An estate planning attorney can set up a trust that the Internal Revenue Service (IRS) will accept.

Corporation or Partnership

Parties who want to take on real estate can form a corporation or partnership and bestow real estate holdings to that entity. The legal entity owns the real estate, not the individual owners. The type of entity—such as a limited liability partnership (LLP), real estate investment trust (REIT), or S corporation—will carry unique tax issues. An S corporation, for instance, can help owners avoid the double taxation that occurs under different corporate structures.

Always seek tax advice before forming a corporation or partnership.

LLPs are managed by the general partner or partners. The limited partners are not responsible for the debts of the partnership. Typically, the most a limited partner could lose is the limited partner's investment.

Key Takeaways

  • If you have a sole and separate deed, you are the sole owner of the property. If you want to own real estate on your own and are married, you may need a quitclaim deed from your spouse.
  • Joint tenants with rights of survivorship have an equal share of the property. If one party dies, the title transfers to the other party.
  • Tenants in common share possession but may own equal or unequal shares. If one party dies, that person's interest passes to their heirs.
  • In some states, community property titles make both parties equal owners and may or may not come with rights of survivorship.