Ownership of Real Property
Real property may be owned by a sole owner, or it may be owned jointly by two or more persons. A person who is the sole owner of a parcel of real property is said to be the owner thereof in severalty. Concurrent ownership or co-ownership, on the other hand, means simultaneous ownership of a piece of property by two or more persons. The several types of concurrent ownership are: (1) tenancy in common, (2) join tenancy, (3) community property, (4) community property with right of survivorship.
TENANCY IN COMMON
A tenancy in common is characterized by only one unity, that of posession. It is created whenever an instrument conveys an interest in real property to two or more persons, and either states "as tenants in common" or does not specify that the interest is acquired by them in joint tenancy or in partnership or in community property. Interest may be any fraction of the whole, thus one party may own one-tenth, another three-tenths, and a third party may own the remaining three-fifths. There is no right of survivorship; each tenant owns an interest which on his death vests in his heirs or devisees.
JOINT TENANCY
Joint tenancy exists when two or more persons are joint and equal owners of the same undivided interest in specified property. The main characteristic of a joint tenancy is the right of survivorship. When a joint tenant dies, his interest in the property is terminated, and the estate continues in the survivor or survivors.
The usual method of creation of a joint tenancy is by a deed describing the grantee as follows: "to A and B, as joint tenants." the words "with right of survivorship" are often added, but not a requisite, since this right is an incident of joint tenancy whether expressly cited or not. Problems have frequently arisen regarding the true character of the ownership of property by husband and wife as joint tenants. Frequently such property, despite the status of joint tenancy ownership, has been treated as community property for purposes of succession, transfer, disposition in divorce, or seizure by creditors. It may be shown that property in joint tenancy was thereafter converted into community property by either an oral or written agreement.
The contention that joint tenancy property is in fact community property is often raised in divorce cases. The court does not have the power to make an award of separate property, but if it is established that joint tenancy property is in fact community property, the court may award such property to one spouse.
Although upon the death of one joint tenant, the title automatically passes to the survivor(s), title insurance companies will require some formal procedure before recognizing the new owner(s). Two methods can be followed: (1) filing an Affidavit Death of Joint Tenant, or (2) obtaining a court decree of death of joint tenant.
COMMUNITY PROPERTY
Community property is a creation of the Civil Law of Rome and came to California via Mexico. When the Treaty of Guadalupe Hidalgo provided that the property rights of Mexican subjects would be kept inviolate, the early Californians felt compelled to continue the comminity property system and it became incorporated into the California constitution. In general, community property represents the earnings and accumulations of a marriage.
Persons who are not married to each other cannot hold community property together.
All property of married persons which is not their community property is the seaprate property of one or the other. Separate property consists of: (1) Property owned before marriage; (2) proceeds of separate property, such as dividends, rents, profits or property received in exchange for separate property; (3) gifts and inheritances received after marriage; (4) property agreed between the spouses to be separate property; (5) earnings of the wife when she is living separate and apart from the husband; and (6) earnings of the husband when he is living separate and apart from the wife.
All deeds conveying community property must be signed by both spouses. This is true even though the property stands in the name of the husband or the wife.
COMMUNITY PROPERTY WITH RIGHT OF SURVIVORSHIP
Section 682.1 has been added to the Civil Code to provide that, starting July 1, 2001, married couples in California will be able to vest real and personal property in a new form of holding title: COMMUNITY PROPERTY WITH RIGHT OF SURVIVORSHIP. The act also provides that the community property of a husband and wife, when expressly declared in the transfer document to be community property with right of survivorship, shall pass to the surviving spouse without first having to pass through the administration of the estate (probate).
The act further permits the right of survivorship to be terminated prior to death of either spouse the same way a joint tenancy may be severed.
This form of ownership provides, in the opinion of tax counsel, the best tax treatment of property in the event of death of a married person and is the primary reason the statute was enacted.
Note: This form of ownership applies to documents prepared on or after the operative date of July 1, 2001.