Home Seller

How do we change our home to community property?

By From page HMS2 | March 01, 2014

Q: When my husband, then my boyfriend and I purchased our home in 1990, we had the title on the deed listing us as Tenants-In-Common so that we could protect our individual interests in case we went our separate ways. We are now in 2014 and have been married for several years. How do we change from “Tenants In Common” to community property with right of survivorship? We both have relatives who would swoop in like vultures to put in a claim if either of us passed. I have children from previous marriages and my husband has none. Is this “title swap” done on our own, through a title company, or a lawyer?

A: That’s a good question. How to hold title to real estate is a mystery to most. I mean after all, how many times in one’s life do you have to make that decision?

Let me give you the simple answer first, and then I’ll explain for those readers who are interested.

All you have to do is execute a deed from you and your husband, as tenants in common, to you and your husband as community property with right of survivorship. Then go down and record it.

That’s it. Done.

You don’t need anyone special to help you do it. A lawyer or a legal document preparation company can do the paperwork for you or you can find a form grant deed and do it yourself. The important thing is to get the language correct so if one of you dies, the heirs don’t have to fight over how title was held.

Once again this column is far too short to delve into the finer points of how title to property should be held, but let me touch on the high points.

When only one person owns real estate, title is generally pretty simple. The deed says something like Sally Seller, a single woman, hereby grants to Bobby Buyer, a single man, title to 123 Main St.

Mr. Buyer then owns it. If he dies, whoever inherits his other stuff gets the house.

But when two or more people are co-owners of real estate, a decision has to be made. Sometimes that decision is for tax reasons, but more commonly it’s for the purpose of figuring out what happens to your ownership share when you die.

This methodology may seem antiquated, and it is, but we’ve inherited the general concept from real estate laws dating back to the early civilization of Europe.

For example, two or more people can own property as joint tenants.

In that event, when one person dies, his ownership interest is immediately divided among the remaining owners. As a consequence, the next of kin aren’t going to inherit the dead guy’s interest unless they were also the co-owners of the property at the time of his death.

For hundreds of years, families have put their eldest son on title as a joint tenant so when Mom and Dad dies the eldest son automatically owned it.

For those of you who follow “Downton Abbey,” you’ll recall they ran into that problem when what’s-his-name was killed in a car crash and they didn’t know if what’s-her-name, the daughter of the older patriarch guy, would inherit his share or it would go to the infant kid  . . . oh never mind.

Anyway, today, non-married couples often choose to hold title this way since it allows title to pass to the surviving person.

Then there’s tenants in common, undoubtedly the most common way of holding title.

With tenants in common, each co-owner maintains their separate interest. So if one owner dies, his interest is inherited by whoever his heirs are.

That can be distressing for the other owners who suddenly see, for example, the dead guy’s 33 percent interest go to four squabbling brat kids who each have a say in the management of the property.

Then of course there is community property.

In California, community property is reserved for married couples and for seniors who are registered domestic partners.

Classic community property provides for the inheritance of the surviving spouse, but with certain conditions if the deceased spouse has children not from the surviving spouse.

The relatively new community property with right of survivorship was designed to fill a gap between community property and joint tenancy for married couples and takes away some of the exceptions in community property inheritance.

There are also a pile of rules concerning each method of holding property, including whether an interest can be given by will, or sold individually.

There are also capital gains issues concerning the setting of the value of the property at the time the person dies, which differ from method to method.

And finally, for estate planning, liability or investment purposes a lawyer may advise holding title differently, like in the name of a trust.

So the answer to your question is simple. The issue, however, can be very complicated.

Tim Jones is a real estate attorney in Fairfield. If you have any real estate questions you would like to have answered in this column you can contact him at SolanoScene @TJones-law.com.

Tim Jones


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