“So, what’s the difference between community property and joint tenancy?”

When your clients ask, do you have the answer?

Homebuyers are often uninformed or unaware of the different methods for holding title. Knowing the basic differences between these vestings will help your clients make the decision that works best for them

Community property vestings

For married couples, three common ways to hold title are:

  • community property;
  • community property right of survivorship; and
  • joint tenancy.

The two community property methods split ownership interest in the property between spouses. All property purchased by a married couple is automatically community property in California (unless otherwise stated in the vesting). The vesting determines the disposal of the property in the event of one spouse’s death.

The simple community property vesting allows either spouse to will their half of the ownership interest to a third party.

In contrast, the community property right of survivorship and joint tenancy vestings do not allow a third party to inherit upon the death of one spouse. Instead, the deceased spouse’s interest is transferred by death to the surviving spouse. This is an especially important distinction if either spouse has children from another marriage.

Editor’s note — Only married couples can take title to property as community property. However, the registered domestic partners and registered domestic partners right of survivorship vestings offer registered domestic partners the same rights and protections covered by the community property and community property right of survivorship vestings, respectively. [Calif. Civil Code §682]

Non-community property vestings

For unmarried couples (romantic or otherwise) two common methods of holding title include:

  • tenants in common; and
  • joint tenancy.

These vestings do not limit the number of persons on title.

A tenants in common vesting allows the ownership to be divided into any number of interests, equal or unequal. Each co-owner has separate legal title to their interest. Thus, they are able to will their ownership interest in the property to whomever they choose.

A joint tenancy grants equal interest to all owners of the property. When one member of the joint tenancy dies, their ownership interest is immediately transferred pro rata to the surviving owner(s).

When asked about how to vest title, advise your clients about the different types available as you have learned them. Explain the differences to the best of your knowledge. Mention the source of your knowledge. But always recommend they confirm your advice with their accountant or attorney.