Holding Title to Real Property in Arizona

Although not spoken about as part of the home/land purchase process, how you take title is crucial in the decision making of property ownership.

There are multiple ways to take title in Arizona and it is up to the purchaser and his/her specific needs. That being said, it is important that consideration be given to seeking legal and/or tax advice from a professional when making the decision. So lets begin.

Joint Tenancy With The Right Of Survivorship

Two or more persons may hold title to real property as joint tenants with the right of survivorship. In the past it was required that all joint tenants share the four unities of time, title, interest and possession. As of July 20, 1996, the Arizona legislature abolished the requirements of the “straw deed” and the necessity of joint tenants to all take their interest at the same time. The advantage of joint tenancy is that upon death of one of the tenants, their interest is transferred outside probate to the surviving joint tenant(s). Please note that married couples must show intent and in writing that they are taking title as joint tenants with right of survivorship or it is assumed they will take title as community property.

Tenancy In Common

Two or more persons may hold title to real property as tenants in common. In Arizona, married couples must reject community property and specifically take title as tenants in common. Each owner has a distinct and proportionate interest without the right of survivorship. The only unity involved is possession. Their undivided interest need not be equal, but in the aggregate cannot exceed 100% of ownership interest. A tenant in common may transfer his undivided interest without destroying the co-tenancy estate.

Community Property

Only persons married to each other may own real property as community property. Each spouse owns an undivided one-half interest in their community real property. However, Arizona community property law requires both spouses to join in a conveyance or encumbrance of community real property. Property acquired by a spouse during marriage is presumed to be community property except that property acquired by gift, device or descent. A married couple seeking to hold title to real property located in Arizona in a form other than community property may do so by renouncing the community property form and specifically accepting another form of co-tenancy.

Community Property With The Right Of Survivorship

Only persons married to each other may take title as community property with the right of survivorship. One spouse is entitled to the whole of the property upon the death of the other and both halves of the community property receive a new tax basis equal to the fair market value as of the date of death. Again, intent of a married couple to hold title to real property as community property with the right of survivorship must be in writing to avoid the assumption of community property. When parties that hold property as community property with the right of survivorship dissolve or annul their marriage, the property converts to tenancy in common.

Sole And Separate

Real property owned by single persons or a spouse before marriage or any acquired after marriage by gift or decent of specific intent. If a married person acquires title as sole and separate property, his/her spouse must execute a Disclaimer Deed.

General Partnership

Title may be take in the name of a general partnership duly formed under the laws of the state of Arizona or the state of the formation of the partnership. A partnership is defined as a voluntary association of two or more persons as co-workers in a business for profit.

Limited Partnership

A partnership formed by two or more persons under the laws of Arizona or another sate and having one or more general partners and one or more limited partners. A certificate of limited partnership must be filed in the Office of the Secretary of State, a certified copy of which must be recorded.

Corporation

Title may be taken in the name of a corporation provided that the corporation is duly formed and in good standing in the state of its incorporation.

Do not be intimidated, with the help of a professional this is an easy decision to make.

 

Shawn Snelling, Associate Broker, Squaw Peak Realty