One of the most important decisions homebuyers must make is determining how their legal interests will be reflected in the Grant Deed that records at the close of escrow. The manner in which the ownership interest of each party is stated is called the vesting of title to real property. The vesting defines the share of ownership each holds, and how that share will be distributed upon the death of any owner.

Tenancy in common

Tenancy in common establishes percentage shares of interest for each owner. Unless the percentage is stated outright, shares are assumed to be equal among the owners. This method is common among two or more owners who each wish to hold their interests separate from the others. Upon the death of any owner, his estate will be distributed according to probate or other legal documents created within an estate plan*.

Joint Tenancy

Joint Tenancy has a much different effect upon the ownership interest in the death of a joint owner: the share owned by the deceased person transfers to the remaining joint tenant(s) upon the delivery of a death certificate and affidavit (a formal sworn statement which attests to the fact that the person named in the death certificate is the same person who held the ownership interest). This vesting option was historically popular among married couples with modest estates, although more recently introduced options have gained popularity since the turn of the new millennium.

Trusts

Trusts are popular estate planning tools which provide both flexibility and tax benefits, and the creation of a trust is often prompted by the decision to make a first-time real property purchase. It is important to note that creating a trust requires the gathering of many personal records and scheduling an extensive appointment with an attorney, CPA or other financial adviser. Homebuyers considering the creation of a new trust should conduct early research to avoid any closing delay.

Community Property

Married couples and Registered Domestic Partners have vesting options unique to their legal bonds.  Holding title as Community Property allows couples to retain separate interests in property that will be devised by will. Holding title as Community Property with Right of Survivorship permits couples to enjoy the easy transfer of interest on death afforded by joint tenancy with tax benefits not available under Community Property alone.

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It is easy to see that there are many factors to consider when deciding how to take title to real property. The following guide describes some of the general characteristics on common vesting choices. This is a very general guide, and should be used only as a baseline for identifying the various options.  *It is very important to seek advice from an estate attorney or other tax professional to ensure that you understand the consequences of your vesting decision before completing this significant purchase.*