A topic that I like to revisit every few years is how ownership should be taken when one buys real estate. If you are in the market to purchase a home, a question that you should ask yourself is how you want to take title. When you go under contract on a property, your title and escrow company will ask you this question.
To help you prepare for the answer, here are the most common ways that parties take title in Arizona. There are other methods in our state that are designed for, trusts, corporations, and partnerships; however, in the interest of simplicity, they are not included here.
Community Property: Arizona is a community property state. There is a statutory presumption that all property acquired by a married couple is community property. Community property is a method of co-ownership for married persons only. Upon death of one of the spouses, the deceased spouses’ interest will pass by either a will or intestate succession.
Community Property with the Right of Survivorship: Community property with the right of survivorship is a method of ownership by a married couple that vests title in the surviving spouse upon death of one of the spouses.
Joint Tenancy with the Rights of Survivorship: A method of ownership between two or more persons in which title transfers to the survivor(s) upon death of any one or more of the vested owners. Since ownership is automatically passed onto the survivor, acceptance must be made by all parties acknowledging the relinquishment of their right to will the property to heirs.
Tenancy in Common: A method of co-ownership where parties do not have survivorship rights and each owns a specific undivided interest in the entire title.
Sole and Separate: Real property owned by a spouse before marriage or any acquired marriage by gift, devise, descent, or specific intent. If a married person acquired title as sole and separate property, his/her spouse must execute a Disclaimer Deed.
While the above methods and definitions may seem bewildering, a careful review of the options and an assessment of your circumstances will enable you to make the right decision. Because we reside in a community property state, the way in which one takes title to property can have future legal and tax consequences. If you are unsure which way is best for your situation, you should consult with a real estate or tax attorney, and/or an accountant.