Phoenix Arizona sales & rental info

Phoenix Arizona Real Estate Info & Home Rentals

posted Oct 14, 2009, 11:16 PM by Terry Marion   [ updated Dec 24, 2012, 11:54 AM ]

Ways of Owning Phoenix
Real Estate

When buying real estate in the US there are two general ways in which title can be taken; directly by the individual(s), or indirectly through an entity such as a corporation, partnership or trust. I further divide the indirect ownership into Canadian entities and US entities.

 

It is important that you know and understand your options and remember that there are no one size fits all solutions. It is uncommon to find a solution that has all positive and no negative attributes. You need to talk to a knowledgeable advisor to review your goals and your options to determine which solution works best for your situation. In this chapter I will be discussing the most common ways to own as well as the pros and cons of each.

 

Direct ownership through individual(s):

The simplest way to buy a piece of real estate is to title the property directly in your name or you and your spouse‘s name. Of course, direct ownership is not limited to two people or to a husband and wife, there can be many individuals named on the title. While it is possible to name any number of individuals on the title, I would typically recommend establishing some sort of entity if you name anyone other than a spouse.

 

There are two main reasons for using an entity when someone other than your spouse will be an owner. The first reason would be to protect your assets from lawsuits or the claims of the creditors of your co-owners. For example, if your co-owner gets a divorce, the spouse could get one-half of their share of the property. Other problems would be bankruptcy and various judgments and lawsuits against the co-owner that could cause you to become an owner of the property with a complete stranger or it might cause a forced sale at an inopportune time.

 

If you are considering naming a child as a co-owner to avoid probate, seven states allow for the property to be transferred on death directly to a beneficiary with-out probate. This is also known as a beneficiary deed. Those seven states are Arizona, Colorado, Kansas, Missouri, Nevada, New Mexico and Ohio. A beneficiary deed is similar to any other beneficiary designation you use such as with your registered accounts or with life insurance. The beneficiary can be changed at any time before death. If the property is held jointly, the beneficiary receives the property after the second death. A beneficiary deed can be done through the title company or with an attorney.

 

The type of ownership depends on the state. Not all states allow all possible ways to own a property. In general, there are two types of laws in which to own property, they are called community property law states and common law states. Community property states are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. There are two different ways you can purchase an asset using community property laws; ―community property and ―community property with rights of survivorship.

 

Definitions of each are:

Community Property – In community property states only married couples can take ownership as community property. In this case, they will each own a half interest in the property. Unlike joint tenants, the owners can pass their interest (half) by will or trust upon their death and will not avoid probate.

 
Community property with rights of survivorship – Certain community property states allow married couples to own property as community property with rights of survivorship. Like community property, the couple will each own a half interest in the property; however when one of them dies the survivor automatically owns the entire property and avoids probate.

 

Information provided by: Keats, Connelly and Associates, LLC

Cross Boarder Specialists Located in Phoenix Arizona

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