How Co-Owned Property Is Held in California

Tenancy in common

This is the default where two or more people take title and say nothing else on the deed. Shares can be unequal. Each owner can sell their share, mortgage it, or leave it to whoever they choose. There is no survivorship, so a share does not pass to the other owners on death. It passes under the owner's will or trust, or by intestacy, which is the set of rules deciding who inherits when there is no will.

This is the form most often involved in partition actions, the court cases that end shared ownership when the owners cannot agree. It is also the form the Partition of Real Property Act addresses.

Joint tenancy

Joint tenants hold equal shares, with a right of survivorship. That means when one joint tenant dies, their interest passes automatically to the survivors. It stays outside the estate, and outside probate, the court process for passing on what someone owned. That is usually the reason people choose it.

It is also more fragile than people assume. A joint tenancy can be severed, meaning broken apart, and one owner can do it on their own. Once it is severed, the interest becomes a tenancy in common and the survivorship is destroyed. A joint tenant who transfers their interest, sometimes to themselves, can change what happens on death without telling anyone.

Community property, and with right of survivorship

Property acquired by a married couple during marriage is generally community property in California. Each spouse holds an undivided one-half interest, meaning half of the whole rather than a marked-off half of the land. On death, the deceased spouse's half passes under their estate plan, unless the wording on the deed, known as the vesting, says otherwise.

Community property with right of survivorship puts the two together. The survivor takes the whole automatically, and the property keeps the tax treatment of community property. For many married couples holding a home it is the sensible vesting. It is frequently not the one on the deed, because nobody revisited the paperwork after the purchase.

Why the vesting is worth checking now

The wording on the deed produces consequences at exactly the moment nobody wants to deal with them. A death, a divorce, a dispute. Correcting it while everyone is alive and agreeable is a short task. Correcting it afterwards may not be possible at all.

Two situations deserve a look in particular. The first is a couple who married after buying, whose deed still reflects how they took title as unmarried people. The second is a family who added a child to title for convenience. That gives the child a present ownership interest, meaning a real stake in the property now, with consequences for creditors, capital gains and control.

What each form does on death

Tenancy in common. The deceased owner's share passes under their will or trust. If there is neither, it passes by intestacy, the default rules for who inherits. It goes through the estate. Shares can be unequal, and each owner controls their own.

Joint tenancy. The interest passes automatically to the surviving joint tenants, outside the estate. Shares are equal by definition. A joint tenant cannot leave their interest by will, because there is nothing left to leave.

Community property. Each spouse holds an undivided one-half of the whole. The deceased spouse's half passes under their estate plan, unless the vesting on the deed provides otherwise.

Community property with right of survivorship. The survivor takes the whole automatically. The property also receives the community property treatment for basis purposes, basis being the figure used to work out gain if it is later sold. For many married couples holding a home this is the appropriate vesting, and frequently not the one on the deed.

How a joint tenancy gets broken without anyone noticing

A joint tenancy depends on what the law calls the four unities. Sever any one of them and the interest converts into a tenancy in common. A joint tenant can sever unilaterally, meaning without the others. They can convey their interest to themselves as a tenant in common, record it, and it is done.

There is no requirement to tell the other joint tenants. A family that believes the survivorship will operate can discover after a death that it was severed years earlier.

Severance also happens accidentally. A transfer into a trust that was not structured to preserve the joint tenancy can do it. So can a transfer to a new spouse. Where survivorship is the objective, check the deed after any change in ownership or estate plan.

Adding a child to title, and why it usually backfires

Parents frequently add an adult child to title to avoid probate. It works for that limited purpose, and it creates several worse problems.

The child now holds a present ownership interest, a real share in the property today. That share is exposed to their creditors, their divorce and their bankruptcy. The property cannot be sold or refinanced without them. And where the parent's intention was that the child inherit, adding them during life generally leaves the child worse off on basis. Inherited property receives a basis adjustment. A lifetime gift does not.

A revocable trust, one the parent can change or undo at any time, achieves the probate objective without any of that. That is why it is the usual answer.

This article is general information about California law and is not legal advice for any specific situation. If you are dealing with this issue, the facts of your matter will change the analysis.