Oftentimes, people contact our office about preparing some type of real property deed transfer document. These documents are intended to transfer an existing owner’s interest in a property to someone else. However, these forms are misleadingly simple. In fact, some incorrectly completed aspects of real property deed preparation may detrimentally affect ownership rights down the road. Therefore, 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. Everyone should understand the effects of their paperwork and seek any necessary legal advice to ensure complete and accurate documentation.
Real Property Deed Transfers – Potential Complications
There are several different types of transfer deeds to real property. Additionally, there are several different ways people can hold the title to real property. Therefore, the party making the transfer must have a clear understanding of these differences. This knowledge is imperative for successful transfer with the parties’ real intent.
Unfortunately, when a deed transferring ownership is incorrectly prepared, the effect can be devastating and expensive. For example, a client recently came to A People’s Choice 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, avoiding 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, it would have worked as intended had a professional properly prepared the deed. Unfortunately, the deed lacked the three simple words “as joint tenants”. Thus, rather than holding the property with automatic rights of survivorship between mother, father, and daughter co-owners, each party owned one third interest with no rights of survivorship!
As a result of this mishap in deed preparation, the daughter could not easily transfer the property into her name after the death of her parents. Instead, she had to file a lengthy and costly probate proceeding. However, all of this could have been avoided were the parties educated on title options and had hired a professional to prepare the deed properly.
Types of Real Property Deed Transfers
There are several different real property deed forms:
Grant deeds are the most common deeds to transfer title.
Quitclaim deeds are used to convey any interest the grantor “might” possess in the property.
Interspousal transfer deeds typically convey interest in real property between spouses.
Warranty deeds are most common to Midwest and Eastern states. They include an added guarantee 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 deeds are special deeds transferring property to or from a trust
Trust deed (deed of trust) is a mortgage lien. It does not transfer property ownership.
Some of these deeds transfer an owner’s interest and some do not. For example, a deed of trust does not transfer ownership interest, but is rather a recorded instrument that places a mortgage lien on the real property. Further, a deed of trust reflects a bank loan’s interest against real property.
Real Property Deed Determines Type of Ownership
There are many different ways to hold ownership to real property. Additionally, the manner in which someone holds title to real property can have important legal effects. For example, the real property deed reflects 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 to real property in California:
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 is a person who is not currently, nor has ever been legally married.
- An unmarried person is a previously married individual or registered domestic partner that has formally dissolved their relationship through legal means.
- A married person (or registered domestic partner) can buy real property and receive title to California real estate as their sole and separate property. Usually, the spouse or registered domestic partner provides consent to this by executing and recording a quit claim deed.
- A legal entity is an entity such as a corporation, LLC, or partnership.
- Revocable living trust allows a person to hold real estate in California. The trustee or trustees 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 by a trust allows transfer to the beneficiaries after the trustee’s death without probate.
Co-ownership by person or entity means that more than one person or entity owns the property. There are several different types of co-ownership, including:
- Community Property: California Civil Code defines community property as property purchased either by spouses or registered domestic partners together or individually. In California, real estate that a married person acquires and holds is the spouses’ community property unless otherwise stated. Furthermore, the spouses or registered domestic partners both have the right to dispose of one-half of the community property under community property law. However, 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 else.
- Community Property with Rights of Survivorship: Title to property stating ownership as community property with rights of survivorship allows the property, upon the death of one of the spouses or registered domestic partners, to pass to the survivor without probate.
- 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 as such. The primary benefit of joint tenancy is the right of survivorship. In this situation, title to the real estate will transfer to the surviving joint tenant upon the death of the other without probate.
- Tenants-In-Common: Individuals or entities can acquire an identified and specific percentage interest in a certain real property. Additionally, 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 who 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 both partner’s the written consent.
If you need to prepare a transfer deed, you can do so without the use of an attorney. For help 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.