When going thru the process of purchasing a home in Arizona you will need to decide in escrow how you would like to take title.  According to the Arizona Residential Purchase Contract: (see 3b. lines 96 and 97) Buyer will take title as determined before COE.  Taking title may have significant legal, estate planning and tax consequences.  Buyer should obtain legal and tax advice.

According to First American Title there are four ways in which persons can take title of their property in Arizona.

1.       Community Property

  • Requires a valid marriage between two persons.
  • Each spouse holds an undivided one-half interest in the estate.
  • One spouse cannot partition the property by selling his or her interest.
  • Requires signatures of both spouses to convey or encumber.
  • Each spouse can devise (will) one-half of the community property.
  • Upon death the estate of the decedent must be cleared through probate, affidavit, or adjudication.
  • Both halves of the community property are entitled to a stepped up tax basis as of the date of death.

2.       Community Property with the Right of Survivorship

  • Requires a valid marriage between two persons.
  • Each spouse holds an undivided one-half interest in the estate.
  • One spouse cannot partition the property by selling his or her interest.
  • Requires signatures of both spouses to convey or encumber.
  • Estate passes to the surviving spouse outside of probate.
  • No court action required to clear title upon the first death.
  • Both halves of the community property are entitled to a stepped up tax basis as of the date of death.

3.       Joint Tenancy with the Right of Survivorship.

  • Parties need not be married; may be more than two joint tenants.
  • Each joint tenant holds an equal and undivided interest in the estate, unity of interest.
  • One joint tenant can partition the property by selling his or her joint interest.
  • Requires signatures of all joint tenants to convey or encumber the whole.
  • Estate passes to surviving joint tenants outside of probate.
  • No court action required to clear title upon death of joint tenant(s).
  • Deceases tenant(s) share is entitled to a stepped up tax basis as of the date of death.

4.       Tenancy in Common

  • Parties need not be married; may be more than two tenants in common.
  • Each tenant in common holds an undivided fractional interest in the estate. Can be disproportionate.
  • Each tenant share can be conveyed, mortgaged or devised to a third party.
  • Requires signatures of all tenants to convey or encumber the whole.
  • Upon death the tenant’s proportionate share passes to his or her heirs by will or intestacy.
  • Upon death the estate of the descendent must be cleared through probate, affidavit, or adjudication.
  • Each share has its own tax basis.

Taking title in such a way that benefits your situation with a spouse, significant other, or business partners is imperative for avoiding negative legal and tax consequences especially in the event of a death.   Before closing escrow on your home, call our experienced Real Estate Attorneys at JacksonWhite Law to discuss the best way for you to take title.

Call JacksonWhite at (480) 464-1111 to discuss your case today.

Schedule Your Consultation

Fill out the form below to get your consultation and discuss your best legal options.