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How do I ‘Take Title’ When Acquiring Real Estate?

While it is true that you most often cannot tell much about a book by its title, the same does not hold true when it comes to real estate, as how title is held to real estate, does tell you a lot.  The question faced by a person acquiring real estate in Arizona concerning how they wish to take title is usually posed to them by their real estate agent or by the title company during the escrow process.    Oftentimes, the answer is given by the buyer after giving about as much consideration to the question as they might to the question coming through the loudspeaker at the fast food drive-thru  window asking what kind of sauce they would like with their chicken nuggets.  How to take title is a decision that certainly warrants more serious consideration than is most often afforded to it, especially as it is a decision that can have substantial probate or tax consequences.

5 Real Estate Title Options

In order to make a knowing decision about how to take title, it is first important to understand the different options for taking title available to an individual buying real property in Arizona, especially if they are married since Arizona is a “community property state.” Those options are as follows:

1. Sole and Separate – If a buyer is unmarried, and is buying property him or herself (as opposed to in an entity, such as a limited liability company), then this is the only manner in which he or she can take title.  If a buyer is married, they can still take title in this manner, which means that their spouse has absolutely no interest in their property upon acquisition; however, the title company will require that the non-acquiring spouse execute a disclaimer deed confirming the non-interest of such spouse.

2. Community Property – If a buyer is married, this is the usual “default” manner of taking title.  There is a legal presumption in Arizona that all property acquired by a husband and wife is community property. The effect of taking title in this manner is that upon the death of one of the spouses, the one-half community property interest in the property of the deceased spouse will pass either under the will of the deceased spouse, or if the deceased spouse does not have a will, by intestate succession.

3. Community Property With the Right of Survivorship – When a married couple takes title in this manner, upon the death of one of the spouses, the interest of the deceased spouse passes automatically to the surviving spouse without probate.  

4. Joint Tenancy With the Right of Survivorship – When two or more individuals, regardless of whether they are married, take title in this manner, then a deceased owner’s interest will pass to the surviving owner(s) without probate.  

5. Tenants In Common – When two or more individuals take title in this manner, they each will own a specified “undivided interest” in the property, and upon the death of a co-tenancy owner, that person’s interest in the property will pass by will or intestate succession.

Given the various options available, and the ramifications of choosing one option over another, a buyer would be advised to seek the advice of their attorney and/or accountant before deciding how to take title.

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