Buying a home is the largest transaction that the average adult will ever complete. They will commit multiple years of their salary for the purchase price of a property. What they pay for their mortgage each month could be as much as a third of their household income. The property that they purchase will be the largest asset in their personal estate and will likely contribute a significant amount to their personal wealth.
The vesting, or way that someone assumes title for the property, is a very important form of protection. Depending on the type of deed that an individual executes, they can hold real property in several different ways, each of which may have certain benefits and drawbacks.
How do people hold title for real property in Arizona?
Many people who own real property hold title with another person. They may choose to have their vesting language declare them tenants in common, meaning each party has a separate interest in the property. Each owner will have an equal interest in the property unless the deed indicates otherwise.
Many people assume title in different ways to keep the home out of probate court or prevent legal challenges in the future. For example, those who execute a deed to own a property as joint tenants with rights of survivorship will see their share of interest in the property automatically transfer to their co-owner when they die. Others hold the home as community property, with or without rights of survivorship. A married person can also hold title as the sole and separate owner.
Some people start trusts specifically to own their real property, and others may use an LLC, partnership or corporate entity as the technical owner of their property. Each of these approaches can offer certain benefits, such as access to different forms of financing and possibly tax benefits. The specific way that someone holds title should be a reflection of their arrangements with any co-owners and their desire for what will happen to the property after their passing.
What is simplest isn’t always what is best
It is always possible to execute and record new deeds when someone who already owns a property wants to change their vesting. However, it is typically most cost-effective and protective to assume title in the best way possible at the time of acquiring a property. Exploring different ways to hold title can help people determine the right kind of deed to execute when conducting a real estate transaction.