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, could have a harmful effect about how the recorded ownership in the property is determined 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, they had 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 proceeding. 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, the property was actually owned with each party having 1 /3 interest and NO RIGHTS OF SURVIVORSHIP! As a result 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. 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. Included an added guarantee that grantor is guaranteeing the grantee that title to the property is free from any defects that may affect the title, even if the defect was caused by a prior owner.
· Trust Transfer Deed – Special deed transferring property to or from a trust
· Trust Deed – Mortgage lien (does not transfer property ownership)
Some of these deeds transfer an owner’s interest and some do not. A “Trust Deed” does not transfer ownership interest, but rather is a recorded instrument that places a mortgage lien on the real property. Trust Deeds are typically recorded to show 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 title is held can have important legal effects and is specifically identified on the real property deed. Here are some of the more common ways to hold title/ownership to real property in California.
Sole Ownership: Sole ownership means that the property is owned by one person or entity. There are four different types of sole ownership. Ownership can be held by:
- A Single Person: A person who is not and has never been legally married.
- An Unmarried Person: An individual who was previously married but not legally divorced, or who has been in a registered domestic partnership that has been legally dissolved.
- A Married Person (or Registered Domestic Partner) as their Sole and Separate Property: When a person is married or has a registered domestic partner and desires to buy real property, they can hold the title to California real estate in his or her name alone. Usually the spouse or registered domestic partner provides consents 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: Real estate in California can be held by a revocable living trust. Title to the California real estate is held by the Trustee or Trustees of the trust who retains complete control over the trust and has complete 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 the property is owned by more than one person or entity. There are several different types of co-ownership. Ownership can be held as:
- Community Property: In California, community property is defined in California Civil Code 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 acquired and held by a married person is deemed to be 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 property is expressly declared in the transfer document to be community property with rights of survivorship, the property will, upon the death of one of the spouses (or registered domestic partners), 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. The joint tenancy can be created by a transfer that expressly declares 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. Title is vested 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 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.