Aug 26 , 2004

Devries Column

Methods of holding title on real estate vary according to client’s needs

This week’s question:
My wife and I are going to purchase a residence in the Almaden Valley very soon. Our real estate agent said that we should check with our attorney as to how we should take title. She even gave us a written warning from her real estate company saying the same thing. Is this really necessary? Can’t our agent just tell us what’s best for us?

Tony T.
Almaden Valley

Dear Tony:
You and your wife have a smart and ethical real estate agent, one who is looking out for you. Just how you take title is a very important legal question, one that is asked every day of real estate agents, escrow companies, and title professionals, as well as attorneys. And the answer should be the same—check with your attorney, since recommending a form of title could well be practicing law.

The simplest form of real estate ownership is as an individual. For example, “John Smith.” The disadvantage with that form of ownership is that upon John’s death, the property would need to pass through probate at the courthouse. Fees and costs as well as delay, loss of privacy and stress would be substantial. John Smith may want to think about a living trust so that the house could be held as, for example, “John Smith, Trustee of the Smith Living Trust Dated September 1, 2004.”

A husband and wife can take title as community property, community property with right of survivorship (after July 1, 2001), tenancy in common, and joint tenancy, as well as trustees of their trust if indeed they have a trust (as they probably should if they live in the Almaden Valley).

With tenancy in common, ownership can be divided into any number of interests that can be equal or unequal.

Ownership interests cannot be divided with joint tenancy. And with community property, ownership interests are generally equal between husband and wife.

Each co-owner has a separate legal title to his or her undivided interest in tenancy in common property that passes upon the co-owner’s death by will to his or her devisees or heirs. A “devisee” is a person who receives real estate from someone else by will. No right of survivorship exists with tenancy in common property.

With joint tenancy property, upon the death of one of the joint tenants, generally the property passes by right of survivorship to the surviving joint tenant. Automatically. This may well have unintended (i.e., disastrous) consequences with regard to income tax basis and thus capital gain tax, as well as property control issues. The house that had been held in joint tenancy may pass to the surviving spouse and he or she later marry a new sweetheart and leave nothing to the children from the previous marriage. Could well be sad but true.

Joint tenancy property cannot be willed, since the survivor owns the property automatically due to the survivorship feature of joint tenancy property. After a joint tenant dies, the survivor records a simple “Affidavit of Death of Joint Tenant” with attached certified copy of the death certificate. This then would transfer legal title to the surviving joint tenant—regardless of what it states in the will or living trust.

A purchaser becomes a tenant in common with the other co-owners of tenancy in common property. The same would be true as to a purchaser of joint tenancy property, i.e., the purchaser becomes a tenant in common with the other co-owners. With community property, a purchaser can only acquire the whole title of the community estate—not part of it.

What’s best for you, Tony? This will depend upon your circumstances. And as I said at the beginning of this article, you and your wife have a smart and ethical real estate agent. Accept her advice and check with your own attorney. That’s really the best thing for you to do. And good luck with that new home in Almaden Valley!

Donald J. DeVries
Almaden Valley

Donald J. DeVries is an attorney practicing law in Almaden Valley. If you would like him to answer your question in his next Almaden Times column, you can reach him by e-mail at don@almadenvalleylawyers.com, fax at (408) 268-6502, telephone at (408) 268-9500, or mail at, 6475 Camden Avenue, Suite 200, San Jose, CA 95120. Your matters are personal and private, so of course, he will not disclose your identity or any details about your situation. Want to learn about a specific legal issue or how DeVries can help you? Visit his web site at www.almadenvalleylawyers.com. Almaden Times columns since 1986 are available there. DeVries writes this column to provide you with general information about important legal matters affecting California residents—not to give you legal advice about your specific matter. No attorney-client relationship is created by these articles. The law is complex and constantly changing and varies from state to state. So you should consult an attorney before taking any action that would affect your personal or business matters.