Buying a home in Prescott,AZ or Prescott Valley,AZ? Title to real property in Arizona may be held by individuals either in SOLE OWNERSHIP or in CO-OWNERSHIP. In co-ownership of real property, title is held by two or more persons. There are several variations as to how title may be held in each type of ownership. The following brief summaries are the more common examples of sole ownership and co-ownership. For a more comprehensive understanding of the legal and tax consequences, please consult an attorney or financial expert.
- Sole and Separate: Real property owned by a spouse before marriage or any acquired after marriage by gift, descent or specific intent. If a married person acquires title as sole and separate property, his/her spouse must execute a disclaimer deed.
- Tenancy in Common: Two or more persons may hold title to real property 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. If a married couple wants to hold title in this manner, they must specifically state on the deed that they reject holding tilte as community property and will hold title as tenants in common.
- 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, the advantage of joint tenancy is that upon death of one of the joint tenants, their interest is transferred outside of probate to the surviving joint tenant(s). As of July 10, 1996, the Arizona legislature effectively abolished the requirement that all joint tenants share the four unities of time, title, interest and possession.
- Community Property: Only persons married to each other may own real property as community property. Each spouse owns an equal interest in their community property. Each spouse may provide by will for the disposition of his or her community interest in the community real property, however, Arizona community property law requires both spouse join in a conveyance or encumbrance of the community real property. Property acquired by a spouse during marriage is presumed to be community property except that the property is 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 interests of the community property receive a new tax basis equal to the fair market value as of the date of death. Evidence of the intent of a married couple to hold title to real property as community property with the right of survivorship must be in writing in order to avoid the presumption 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.
Courtesy of Pioneer Title Agency…"Commitment to Service"
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