Methods of Holding Title (Vesting) in California

Title to real property in California may be held by individuals either in sole ownership or in co-ownership. How you take title — known as 'vesting' — has significant legal and tax consequences. Team Goeglein at Fidelity National Title helps agents and their clients understand the options so they can make informed decisions with their attorney or CPA.

Sole Ownership: A single man or woman (not legally married), an unmarried man or woman (having been married but legally divorced), or a married person taking title as sole and separate property. When a married person takes title alone, the spouse must consent by quitclaim deed, relinquishing all right, title, and interest in the property.

Community Property: Property acquired by husband and wife, or either, during marriage. Both spouses have equal management and control. On one spouse's death, half belongs to the survivor and half goes by will or succession. Community Property with Right of Survivorship (available since July 1, 2001) combines traditional community property attributes with the right of survivorship — the full interest vests in the surviving spouse immediately upon death, similar to joint tenancy, but with community property tax benefits. The survivorship feature avoids probate delays. Spouses can unilaterally sever the right of survivorship, reverting to traditional community property form.

Joint Tenancy: Two or more persons holding equal ownership interests. When a joint tenant dies, title immediately vests in the surviving joint tenant(s) — the property is not subject to disposition by will. Sale or encumbrance by one joint tenant severs the joint tenancy. Each joint tenant has an equal right of possession.

Tax Consequences — Joint Tenancy vs. Community Property: This distinction matters significantly at death. With joint tenancy, only the deceased spouse's half receives a 'stepped-up' tax basis to fair market value. For example: a $100,000 purchase now worth $200,000 — the surviving spouse's basis is $150,000 ($50,000 original + $100,000 stepped-up), resulting in $50,000 taxable gain if sold. With community property, the entire property receives a stepped-up basis — the surviving spouse's basis becomes $200,000 with zero taxable gain. This 'double step-up' is one of the most significant tax advantages of community property vesting in California.

Tenancy in Common: Two or more persons holding separate legal title to undivided interests — ownership can be divided into any number of interests (they don't need to be equal). On a co-owner's death, their interest passes by will or to heirs — there are no survivorship rights. Devisees or heirs become tenants in common with the remaining owners.

Partnership: Ownership interest is a personal property interest held in the partnership name. Equal right of possession exists but only for partnership purposes. Real property transfer requires written consent of other partners.

The way you hold title affects everything from property taxes to estate planning to liability exposure. Matt Goeglein and Xavier de la Piedra IV at Fidelity National Title strongly recommend consulting an attorney and/or CPA for specific vesting advice on every transaction.