Get the Basics Regarding Holding Title and Vesting in Real Estate Terms
For many people, there is nothing more exciting than buying a home. However, it can also be a very stressful situation. At Neighborhood Escrow, we have worked with many buyers and sellers and offer answers to some of the most commonly asked questions about escrow. You can keep reading to learn the basics about holding title and vesting.
The Vesting Form Should Be Included in Your Opening Package
One of the most important things you will get from your escrow company is an opening package. It contains a wealth of information about your escrow – including your Vesting Form. That form is essential in outlying how the buyer will hold title on the property.
The Vesting Form Can Be More Complicated Than It Seems
On the surface, it might seem simple to determine how the property will be vested, but the truth is that there are costs, benefits, and transfer issues relevant to each type of vesting. The Vesting Form will outline who is responsible depending on how the property is vested. Correctly vesting the property is important when it comes to conflicts that could arise between spouses, creditors, partners, and even the IRS.
Common Ways to Hold Title
There are numerous ways a person can hold title. They include:
- Sole ownership
- As a single man or single woman
- As a married man or married woman
- As a registered domestic partner
- Community property
- Community property with rights of survivorship
- Joint tenancy
- Tenancy in common
Many of those terms are self-explanatory, but not all of them. Community property (which is the presumed form for a married couple) ensures that all parties have an equal share in the property, and community property with rights of survivorship means that the property will automatically transfer to the survivor in the case of death of anyone holding title.
Joint tendency means that there are equal interests with rights of survivorship, but the partners are not necessarily married. Tenancy in common means that the parties have interests that are broken up, and the costs (and benefits) are thus equally broken up.
Vesting Can Make a Big Difference
As you can see from the above descriptions, the way a property is vested can affect who inherits the property and many other factors. None of the above options are right for every situation. You should consult with your attorney, CPA, estate planner, or real estate professional to determine exactly how you should vest your property. Note that your escrow company can answer questions about differences, but we cannot offer legal advice.