How Should Couples Take Ownership of Property in Arizona
Plan Ahead About Taking Ownership
Taking title to your home is the final step in the transaction that will occur when your escrow agent prepares a new deed and electronically files it with the Maricopa County Recorder’s Office. Married couples need to decide in advance what the deed should say about how they’ve decided to legally take ownership of the home.
Many home buyers don’t give this a thought until they are presented with this at the closing table. Depending on their personal circumstances, many couples have choices as to how to take ownership. These may include:
- sole property
- joint tenants with right of survivorship
- community property
- community property with right of survivorship
- tenants by the entirety, or
- tenants in common.
Below, I’ll explain the options that married couples have available to them in Arizona.
If you’re buying a place on your own, you’ll hold it as your sole property, and your deed will reflect that. The property belongs to you alone.
If you’re married but nevertheless purchasing the house on your own, you can still own it as sole property. In that case, talk to an attorney, to discuss not only what to put on the deed, but how to make sure it remains your sole property.
For instance, this may require you to make all the payments on any mortgage or other house-related expenses like property taxes, repairs, and upgrades. Your spouse may also need to sign a quitclaim deed giving up any interest in the house.
However, that won’t necessarily preclude your spouse from claiming an interest based on later contributions—for instance, if you use community property (like your salaries) to make mortgage payments.
Joint Tenants With Right of Survivorship
If you buy the property with at least one other person, you can take title in joint tenancy with right of survivorship. In Arizona, joint tenants must always own an equal interest in the property (50/50 if there are two of you).
The most important feature of this type of ownership is that if one of you dies, the co-owner automatically gets the other share of the property, without the need for probate. It’s common for married couples, domestic partners, and those in committed relationships to take title this way. It’s not so popular among other cobuyers, who may not want to leave their half-interest to their co-owner.
This one’s for married couples (and in some places, registered domestic partners) only in states like Arizona. It’s usually the most beneficial option for married couples. Couples that own their homes as community property each own half of the property, which they can pass on to whomever they please through their wills. They can’t sell or give away their share while living unless the other spouse consents.
Community Property With Right of Survivorship
In Arizona, another way to hold title is “survivorship community property. Property held this way doesn’t have to pass through probate when one spouse dies, but instead goes straight to the other spouse. It’s similar to joint tenancy but limited to married couples.It still carries the other benefits of community property.
Tenants by the Entirety
Another option usually reserved for married couples and those in civil unions – and available with half of the U.S. states, is tenancy by the entirety. Its key advantage is protecting the property from creditors.
You and your spouse each own the entire property and can sell it only with the other’s consent. In most states, if one spouse is in debt, creditors can’t come against that person’s share of the property — a major difference from joint tenancy. However, it’s similar to joint tenancy in that if one spouse dies, the other gets the place without probate hassles.
Tenants in Common
If you’re unmarried and buying with another unmarried person, you could choose to own the property as tenants in common. This allows you to hold property together in unequal shares. For example, if you’re buying with a friend and have agreed on a 60/40 ownership split, your deed can reflect that. If you don’t split your shares in the deed, the split will be assumed to be equal.
With tenants in common, you really have to trust your buying partner. The law will allow either of you to sell your share of the property without the other’s consent, unless you make a separate arrangement. That means you could find yourself with a new housemate, perhaps one you don’t like. Also, each of you owns an undivided portion of the entire property — you own 60% of the entire house, not just the large upstairs unit you and your co-owner have agreed you’ll live in. You’ll have to separately agree on who lives where.
If one owner dies, the other doesn’t have any right to the deceased’s share of the property. Instead, that person’s share will pass according to the will or living trust or, if there is no such document, according to state law (which would normally give the property to a close family member).
Make sure to discuss all these different ways to take title with your attorney before closing your home. Just in case you don’t have a chance to talk with your attorney, remember that it’s possible to change the way title and ownership of property is held. There could be tax consequences in doing this, so be sure and consult your tax professional.
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About the Author: The above article, Best Way Couples Can Take Ownership of Property in Arizona was written by Troy J. Elston, a licensed Realtor at West USA Realty, the premiere real estate brokerage based in Peoria Arizona. With years of experience in the real estate industry, Troy produces stunning results for home buyers and sellers. If you’re thinking of BUYING or SELLING a home in the Phoenix Area, Troy would love to share his knowledge and expertise with you.