“Why is the sky blue?” is a common question a child would ask a parent and be a little annoyed by the answer they found on Google: “The sky is blue because of something called Raleigh scattering. This refers to the scattering of electromagnetic radiation, which light is a form of, by particles of a much smaller wavelength.” That succinctly put-together combination of words would receive an eye roll or a wide-eyed glance. Do you know what question your kids may ask you when they’re older, and you don’t want them to roll their eyes about? They’ll likely ask your advice about how to hold title to their future property. You’re probably thinking that you’d never thought to ask your parents about this, but you also hadn’t purchased real property in your youth and wouldn’t have asked them because that’s just not cool and how they held title to their property was probably the least cool way, duh! But, in all honesty, you never thought about it before your title agency asked you. We’ve talked about the kinds of title insurance you can purchase and done that again because we’re that committed to your knowledge of your property’s title. We’ve also given an overview of how to hold title and the reasons behind it.
So, because we’re this committed to your learning, we’re here to let you know about the difference between a title and a deed, to begin. A title is the bundle of rights that allows you to understand who is the legal owner and has financial interest within the property. A deed is the property’s title and the transfer of title between the buyer and seller of the property. The title company conducts the title search, which is a review of all public records ensuring that the seller is the sole owner of the property, and confirming that no other parties have a legal claim to it. If the title search confirms the ownership of the property, this would mean you have a clear title. The clear title means that no other parties have a claim to your forthcoming property and it can legally be transferred to you. Okay, so now that you know the person selling you the property has the right to do so you can decide what sort of title you’ll be receiving.
Yes, there are choices you need to make about how you’ll own the property. You can have sole ownership, which would mean that you alone can hold the property and it is under your name only. This form of ownership is best for someone living alone or a person that is purchasing an investment property. If this is something that is used by a married person their spouse would need to fill out a quitclaim deed. A quitclaim deed is something that shows the other person has given up ownership rights.
You could also have a joint tenancy with a right of survivorship as your title nomenclature of choice. This is best for couples that are purchasing a property together and simply states that if one member of the joint tenancy passes away the other assumes full ownership of the property. The other owner has to file an affidavit confirming the death of their co-title holder, along with the death certificate. Another option would be a tenancy in common, this is a similar way to hold title and own the property together, but in this case, the person holding title can sell or pass interest to their beneficiaries of choice upon their death. This sort of title-holding is best for groups of people wanting to purchase a property and for a married couple that doesn’t want to have their portion of the property automatically go to their spouse upon their passing. If you hold the title as a tenancy in common and do not designate the property’s distribution in your will it is distributed based on your state’s probate law.
Another “tenancy” title holding is tenants by entirety. In this title-holding category, a married couple can own the property, giving both spouses full ownership of the property. This manner of holding title is not allowed in every state and in this method of holding title, one spouse cannot put their interest in the property for sale without consent or informing the other owner. Another form of ownership is in a living trust. This is a form of holding title via a legal vehicle that allows a trustee to pass their assets, inclusive of property, to a beneficiary after death without going to probate court. This would save your heirs the cost of estate taxes and court fees that could be associated with legal proceedings.
With all that we’ve discussed above, we know that there is a lot of information a person needs to keep in mind when receiving title to their property, or prospective property. If you need a title search performed on your behalf our team at Gables Title Group is ready to help when you purchase or refinance your real property.
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