Often people contact our office about the preparation of some type of real property deed transfer document form to transfer an existing owner’s interest in the property to someone else. Although this may seem to be a simple task, there are several important aspects in real property deed preparation that, if done wrong, may harm and detrimentally affect ownership rights in the property down the road. We always encourage clients to do their homework before recording any deed transfers. This includes becoming educated about options through informational booklets and legal materials so they can understand the effect of the paperwork they are preparing, as well as seek any necessary legal advice.
Real Property Deed Transfers Can Be Complicated
There are several different types of transfer deeds to real property, along with several different ways people can hold the title to real property. It is important that the party making the transfer has a clear understanding of these differences to insure the transfer will carry out the real intent of the parties.
Unfortunately, when a deed that transfers ownership has been incorrectly prepared, the effect can be devastating and expensive.
A person recently came into the office after the death of both her parents. Sometime during her parent’s marriage, someone prepared a new deed adding the daughter’s name to the property. Their intent was that, upon their deaths, their real property ownership would automatically transfer to the daughter without having to go through probate or other complicated proceedings.
Although adding a family member’s name as a co-owner is not necessarily the best option to “avoid probate,” that is what this family chose to do, and it would have worked as intended had the deed been properly prepared by a professional. Unfortunately, the deed left off three little words “as joint tenants.” Unbeknownst to them, rather than holding the property with automatic rights of survivorship between mother, father and daughter co-owners, each party owned 1 /3 interest with NO RIGHTS OF SURVIVORSHIP!
As a result of this mishap in the deed preparation, the daughter could not easily transfer the property into her name after the death of her parents and was required to file a lengthy and costly probate proceeding. All of this could have been avoided if the parties had educated themselves on title options and their effect to carry out what they wanted to do, and then hired a professional to prepare the deed properly.
Types of Real Property Deed Transfers:
There are several different real property deed forms.
Grant deed – The most common deed to transfer title.
Quitclaim deed – Used to convey any interest the grantor “might” possess in the property. The grantor does not necessarily have a recorded interest in the property.
Interspousal Transfer Deed – typically used between spouses to convey interest in real property.
Warranty Deed – Most common to Midwest and Eastern states. Includes an added guarantee that the grantor is guaranteeing the grantee that title to the property is free from any defects that may affect the title, even if a prior owner caused the defect.
Trust Transfer Deed – Special deed transferring property to or from a trust
Trust Deed (Deed of Trust) – Mortgage lien (does not transfer property ownership)
Some of these deeds transfer an owner’s interest and some do not. A “Deed of Trust” does not transfer ownership interest, but rather is a recorded instrument that places a mortgage lien on the real property. A Deed of Trust reflects a bank loan’s interest against real property.
The Real Property Deed Determines Type of Ownership
There are many different ways to hold ownership to real property. The manner in which someone holds title to real property can have important legal effects. The real property deed will reflect the manner of title and can determine what happens to the property if one of the owners dies. Here are some of the more common ways to hold title/ownership to real property in California.
Sole Ownership: Sole ownership means that only one person or entity owns the property. There are four different types of sole ownership, based on the status of the owner:
- A Single Person: A person who is not currently, nor has ever been legally married.
- An Unmarried Person: A previously married individual or registered domestic partner that has formally dissolved their relationship through legal means.
- A Married Person (or Registered Domestic Partner) as their Sole and Separate Property: When a married person or registered domestic partner desires to buy real property, they can receive title to California real estate in his or her name alone. Usually, the spouse or registered domestic partner provides consent to this by executing and recording a Quit Claim Deed.
- A Legal Entity: An entity such as a corporation, LLC, partnership or other such legal entity.
- Revocable Living Trust: A person can hold real estate in California in a revocable living trust. The Trustee or Trustees of the trust retain title to the California real estate, have complete control over the trust, and have full power of direction over the real property. Holding title to real property held by a trust will allow the transfer to the beneficiaries of the trust after the death of the trustee without the need to go through probate.
Co-Ownership by Person or Entity: Co-ownership means that more than one person or entity owns the property. There are several different types of co-ownership. Types of co-ownership by a person or entity are:
- Community Property: In California, California Civil Code defines community property as property purchased either by a husband and wife (or registered domestic partners) together or by a husband or wife (or registered domestic partners) individually. In California, real estate that a married person acquires and holds is the community property of the husband and wife unless otherwise stated. The husband and wife (or registered domestic partners) both have the right to dispose of one-half of the community property under community property law. The one-half of the community property will automatically go to the surviving spouse if the deceased spouse did not otherwise dispose of the community property to someone besides his or her spouse. Example: John Smith and Mary Jane Smith, as husband and wife as community property.
- Community Property with Rights of Survivorship: When title to property states ownership as community property with rights of survivorship. This allows the property, upon the death of one of the spouses (or registered domestic partners), to pass to the survivor without going through probate. Example: James Friedman and Sally Friedman, as husband and wife as community property with Rights of Survivorship.
- Joint Tenancy: California Civil Code defines joint tenancy as a joint interest owned by two or more persons in equal shares. Two or more people can create a joint tenancy by expressly declaring the interest to be joint tenancy. The primary benefit of joint tenancy is the right of survivorship. Title to the real estate will transfer to the surviving joint tenant upon the death of a joint tenant without the need to go through probate.
- Tenants-In-Common: Individuals or entities can acquire an identified and specific percentage interest in a certain real property. Each tenant-in-common owner can hold a different percentage ownership in the real property. With tenants-in-common, there is no right of survivorship, and a tenant-in-common interest will not bypass probate.
- Registered Domestic Partners: Registered domestic partners are those people that have registered with the California Secretary of State’s Domestic Partners Registry. The title shows vesting in the “community” with each interest being separate, but the registered domestic partners each have equal management and control. Transfer of the real estate requires the written consent of both partners.
If you need preparation of a transfer deed, you can have the paperwork prepared without the use of an attorney. For help in filling out the necessary forms, contact A People’s Choice for affordable non-attorney help. While we will not give you legal advice, we can make the process inexpensive, easy and hassle-free.