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Vesting refers to the manner in which purchasers of real estate take title. This may not seem important
at the time of purchase but can become very important at some future date so it is wise to give some
consideration to the subject of vesting. How title is vested, will determine who may sign various documents.
Only you can decide which method of taking title is best for you, here are some options:
Severalty
Ownership by a single person or a corporation.
Community Property
Available only to husband and wife, each having equal interests. Any property obtained by the husband or
wife prior to marriage may remain as separate property. A spouses ownership interest cannot be conveyed
separately, each spouse must join in the conveyance of the property. May include rights of survivorship.
Tenants in Common
Two or more people own a property without rights of survivorship and without community property rights.
Each has the right to occupy the property. Ownership interests need not be equal, the percentage ownership
is specified on the deed. Each owner may transfer or sell his interest in the property independant of the other
owners. When an owner dies his heirs will inherit his share of the property.
Joint Tenants
Two or more people own a property with rights of survivorship, can include husband and wife. All Joint
Tenants must take ownership at the same time. If one of the Joint Tenant owners dies his interest in
the property is split evenly among the surviving Joint Tenant owners. Probate costs and delays are avoided
when a Joint Tenant dies. The deed must contain the phrase "in joint tenancy" or "as joint tenants".
Partnership
Two or more people who are co-owners of a business. No partner can convey title without the consent
of the other partners. When a partner dies his interest passes to his heirs.
Community Property versus Joint Tenants
Husband and wife could take title either way, consider the differences when one spouse dies.
If title is held as joint tenants then the surviving spouse automatically receives the property through the
right of survivorship and the tax basis of the deceased spouse's half interest would be stepped-up to the
fair market value at the time of death.
If title is held as community property withour rights of survivorship then the deceased spouse's interest
would be handled as prescribed in the will or would pass to the surviving spouse if there is no will. The
entire property receives a stepped-up basis to the fair market value at the date of the spouse's death.
Consult an attorney or tax accountant for advice on how to take title.
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