Taking Title or Vesting
What is vesting?
When a title deed is written for real property, ownership is described using the name of the owner(s), and often a phrase which describes the legal relationship between multiple owners or married persons.
For multiple ownership, there are three basic ways in which title can be taken. This may vary slightly from state to state. Vesting decisions should always be made with the help of a real estate lawyer.
Joint tenants all own equal interest in a property and have equal rights of possession, and if any joint tenant dies, that tenant's share is automatically transferred to the surviving tenants. Thus, a joint tenant's share cannot be inherited. Joint tenants must all take title on the same deed at the same time.
Tenancy in common
Tenants in common may have different interests (i. e. 30% and 70%, etc.), different rights of possession, and may take title at different times. They may will their share of the property to their heirs.
If a joint tenant sells his share of a property, the new tenant usually takes title as a tenant in common, unless all the previous tenants renew the title with the new tenant as joint tenants. The new tenant in common may will his interest in the propety to his heirs.
Unless married persons specify otherwise, it is usually assumed that they take title as community property, whether it is stated on the deed or not. A married person may specify on the deed that he or she owns the property sole and separate in order to circumvent this.
Characteristics of community property vary from state to state. Sometimes there is a right of survivorship, as in joint tenancy, and sometimes there isn't. Some married couples choose to take title as joint tenants in order to preserve the right of survivorship.
Real estate agents should avoid describing vesting to their clients, unless they possess the necessary expertise. It could be considered giving legal or tax advice, and the agent could be held liable for any legal cases that arise from his advice. It is also against the REALTOR® Code of Conduct to give any advice outside of one's area of expertise.
Agents can provide written material describing vesting and title, or else it can usually be obtained from Title and Escrow companies.
Differences in vesting can have tremendous unforseen legal consequences, especially in the case of an untimely death or divorce. Dealing with an unexpected probate can be extremely painful, but so can dealing with a joint tenant's heirs who expected to inherit an interest in the property. The legal issues concerning title and vesting are so potentially explosive that it is really important to discuss the options with a real estate lawyer.
By Diane Tuman
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