What’s in a Title?

By David Allen

While it’s true that you most often cannot tell much about a book by its title, the same does not hold true when it comes to real estate – a title when applied to real estate, does tell you a lot.  The question faced by a person acquiring real estate in Arizona regarding how they wish to take title, is typically posed to them by their real estate agent or by the title company during the escrow process.  Oftentimes, the answer from the buyer has as much consideration to the question, as they would a question coming through a loudspeaker at a fast food drive-thru window asking what kind of sauce they would like with their chicken nuggets. How to take title is a decision that certainly warrants more serious consideration, especially since it’s a decision that can have substantial probate or tax consequences.

In order to make a knowing decision about how to take title, it’s first important to understand the different options available to an individual buying real property in Arizona. This is especially important if the buyers are married since Arizona is a “community property state.” Those options are as follows:

Sole and Separate – If a buyer is unmarried and is buying property for him or herself (as opposed to an entity such as a limited liability company,) then this is the only manner in which he or she can take title. If the buyers are married, they can still take title in this manner, which means their spouse has absolutely no interest in their property upon acquisition. However, the title company will require the non-acquiring spouse execute a disclaimer deed confirming the non-interest.

Community Property – If a buyer is married, this is the usual “default” manner of taking title. There is a legal presumption in Arizona that all property acquired by a husband and wife is community property. The effect of taking title in this manner is that upon the death of one of the spouses, the one-half community property interest in the property of the deceased spouse will pass either under the will of the deceased spouse, or if the deceased spouse does not have a will, by intestate succession.

Community Property With the Right of Survivorship – When a married couple takes title in this manner, upon the death of one of the spouses, the interest of the deceased spouse passes automatically to the surviving spouse without probate.

Joint Tenancy With the Right of Survivorship – When two or more individuals, regardless of whether they are married, take title in this manner, then a deceased owner’s interest will pass to the surviving owner(s) without probate. 

Tenants In Common – When two or more individuals take title in this manner, they each will own a specified “undivided interest” in the property, and upon the death of a co-tenancy owner, that person’s interest in the property will pass by will or intestate succession.

Given the various options available and the ramifications of choosing one option over another, a buyer would be advised to seek the advice of their attorney and/or accountant before deciding how to take title.

David has been representing clients in both transactional and litigation real estate and business related matters for over 30 years. David is licensed as an attorney in both Arizona and California, and is also a licensed Arizona real estate broker. David can be reached at 602.248.1082 or dla@jaburgwilk.com.

This article is not intended to provide legal advice and only relates to Arizona law.  It does not consider the scope of laws in states other than Arizona.  Always consult an attorney for legal advice for your particular situation.