Vermilion Realty Blog

It is not uncommon for buyers to ask us about how to take title when getting ready to make an offer on a home.  How you take title can have a significant impact on how property is passed in case of death and taxes.

First, it is important that you consult with a real estate attorney so you have a good understanding of the different ways to take title and the advantages/disadvantages of each method.  Second, every state has different laws concerning titles to real property.  If you are moving to Arizona from another state, do not base title decisions upon what you did prior to moving to Arizona.  Consider these possible issues.

Community Property: in Arizona a husband and wife can take title as Community Property.  But be aware that while either spouse cannot sell their half without the consent of their spouse, one spouse can will their half interest in the property to another person.  Imagine the surprise of a widow to learn that her recently departed husband willed his share to his first wife.  For title to pass to a surviving spouse, the property title must state, “Community Property with Right of Survivorship.”

In Arizona, “joint tenancy” and “joint tenancy with right of survivorship” are synonymous yet a Joint Tenancy deed will usually contain the phrase, “with right of survivorship” for clarity.

There was a time when the establishment of a joint tenancy required the “four unities.”

1. Unity of Interest: all tenants had an equal, undivided interest in the property.  If there are three people, each will hold title to 1/3^rd interest in the property.
2. Unity of Title: all tenants have the same title.  One cannot hold an estate for life and another for years.  Think of the group of tenants being one person and the property as one estate.
3. Unity of Time: all tenants must acquire the property at one time.
4. Unity of Possession: all tenants in the joint tenancy will take and relinquish possession simultaneously.  If one joint tenant decides to sell his/her share, they can but the joint tenancy is broken and the remaining joint tenants and the new owner all become Tenants in Common.

Suppose two people owned a property as Joint Tenants and wanted to allow a third person to acquire a one third interest.  Because of the unity of time, they were unable to establish a joint tenancy.  There was, however, a “work around.”  The two owners would sell their share to a “straw man” for, let’s say, $6.  The three parties would then buy the property back from the straw man, all at the same time, each contributing $2.  This meant the three people met the four unities required for a Joint Tenancy deed; they each had an equal share, they shared the same title, they acquired the property at the same time, and possession was simultaneous. The use of this “work around” contributed to the removal of the Unity of Time as a requirement for the establishment of Joint Tenancy.

And remember, there are also financial implications with how you take title.  For example, property held in joint tenancy cannot be used to fund a testamentary trust should you want to provide upon your death for your young children or a family member needing long term care.

We have more information on taking title in Arizona in our report, coincidentally named, “Taking Title to Real Property.”  To see the report click on “Free Reports” and then the folder titled “Buyers.”  This happens to be our most popular buyer’s report.